Gross Goods and Services Tax (GST) collections declined to the lowest level in this financial year and to a six-month low of Rs 98,202 crore in August (for July), reflecting the overall slowdown in the economy.
GST collections, however, recorded 4.51 per cent growth from Rs 93,960 crore collected in August last year.
The compliance rate remained broadly at the same level as previous month with total number of GSTR 3B returns filed for July at 75.80 lakh till August 31, as against 75.79 lakh in the preceding month.
Of the total Rs 98,202 crore GST revenue, Central GST (CGST) collections stood at Rs 17,733 crore, State GST (SGST) at Rs 24,239 crore, and Integrated GST Rs 48,958 crore, a Finance Ministry statement said.
Overall gross GST collections which include the central government s and states revenues are progressing close to the targeted rate even though the CGST is lagging behind the budgeted target.
A total of Rs 5,14,378 crore has been collected so far in April-August this fiscal, with the average monthly collection at Rs 1,02,875 crore.
The government aims to collect approximately Rs 11.89 lakh crore GST revenue on a gross basis. The monthly targeted rate is about Rs 99,112 crore, a result of the sharp cut in Budget targets announced in July from the interim Budget s targeted rate of Rs 1.14 lakh crore that was presented in February.
Revenue stream from both direct and indirect taxes is reflecting the impact of the economic slowdown.
GST revenue at six-month low reflects slowdown
Though the Rs 98,902 crore of GST collection in August is 4.5 per cent higher than the last year s mop-up, it is the lowest in the 2019-20 fiscal so far. The weakening trend of indirect tax revenue is a direct indicator of the consumption slowdown in the economy. With sliding GDP growth, the buoyancy of tax revenue is likely to get impacted, which would strain the central government s fiscal math for this year. With sales and consumption remaining low across sectors, especially automobiles, it is now to be seen whether the remedial measures announced by the Finance Ministry last month would bring some relief.
In the remaining eight months of this financial year, gross tax revenue needs to grow at a run rate of 22.1 per cent and net tax revenue needs to grow at 28 per cent, the latest monthly accounts figures released by Controller General of Accounts (CGA) showed.
Tax experts said the lower GST collections will be a crucial factor for determining rate cut decision, if any, in the upcoming GST Council meeting on September 20.
Pratik Jain, partner and leader indirect tax, PwC India, said, Slowdown in GST collections perhaps reflects the economic realities on the ground … with virtually no room for rate increase, the government would hope that efforts to plug tax leakages would yield results soon.
Given the slowdown in collections, it would be interesting to see if the GST Council would consider rate cuts in its meeting later this month, for automobile sector as the industry has been pushing for, he added.
Abhishek Jain, tax partner, EY, said, This slight dip in revenue below Rs 1 lakh crore may be linked to the general slowdown in industry. However, a growth vis- -vis the same month in the last year does reflect better GST compliance and payment.
The revenue collections this month may also be a factor of consideration in the rate cut agenda, if any in the upcoming Council meeting.