NEW DELHI: Goods and services tax (GST) collections dipped around 4% to Rs 1.12 lakh crore in August, compared to Rs 1.16 lakh crore in the previous month, but policymakers and experts remained upbeat about revenues remaining strong in the coming months on account of improved economic activity.
Last month’s mop-up, based on sales in July, was nearly 30% higher than last year when the economy had just begun to open up after a nationwide lockdown and 14% higher than the corresponding period in 2019. Barring June, when most states had imposed local lockdowns due to the second wave, the monthly GST kitty stayed above the Rs 1- lakh-crore comfort level.
The GST Council will be meeting in Lucknow on September 17, where a compensation formula for states and inverted duty structure are expected to top the agenda.
“GST collection, after posting above Rs 1 lakh crore mark for nine months in a row, dropped below Rs 1 lakh crore in June 2021 due to the second wave of Covid. With the easing out of Covid restrictions, GST collections for July and August 2021 have again crossed Rs 1 lakh crore, indicating that economy is recovering at a fast pace. Coupled with economic growth, anti-evasion activities, especially action against fake billers, have also been contributing to the enhanced GST collections. The robust GST revenues are likely to continue in the coming months too,” the finance ministry said.
Although the drop on a sequential basis came as a surprise, most experts too shared the optimism. “The collections are for the supplies made in July, when lockdown restrictions were relaxed for most parts of the country. With increasing rate of vaccination and business supplies picking up, the uptrend is expected to continue in coming months,” said Abhishek Jain, tax partner at consulting firm EY India.
M S Mani, senior director at Deloitte, said there is seasonality in GST collections as it is transaction based, which is dependent on consumer behaviour. “The second quarter has begun on a positive note. The onset of the festival season in August will see collection improve further in the coming months,” he said.
At a disaggregated level, barring imported goods that are subject to cess, collections went up compared to August 2019, official data showed.
Some economists, however, advised caution. “The sequential dip in the GST collections, lower-than-expected core sector growth, and moderation in the August manufacturing PMI suggest that some caution is warranted regarding the strength of the recovery,” said Aditi Nayar, chief economist at ICRA.