GST Revenue Collections.

Why in news?

Collections from the Goods and Services Tax crossed the Rs. 1 lakh crore mark in April, 2018.

What is the tax collection picture?

• Revenue from the GST has crossed the Rs.1 lakh crore threshold in April.
• This is the highest recorded in a single month, since the GST implementation in July 2017.
• The total Gross GST revenue collected is around Rs. 1,03,000 crore.
• Of this, CGST is around Rs. 18,000 crore and SGST is around Rs. 25,000 crore.
• IGST collected is nearly Rs. 50,000 crore, including close to Rs.21,000 crore on imports.
• Cess collected is nearly Rs. 8,500 crore, including roughly Rs. 700 crore on imports.

What is the significance?

• The average monthly collection has gone from around Rs. 89,000 crore in the first 8 months to over Rs. 91,300 crore.
• This is only by virtue of the April inflows.
• This is significant because the government’s own limit was Rs. 91,000 crore a month.
• This was the amount projected to ensure that revenues lost by the Centre and the States under the earlier indirect tax system are covered.

What does it imply?

• The GST revenue collections in April show a phenomenal buoyancy as compared to previous months.
• It is seen as an indication of the increased economic activity in the country.
• It also implies a stabilising trend with the tax collections.
• It suggests the indirect tax regime is overcoming the initial problems.
• This would be complemented by e-way bill and improved GST compliance.
• All these are expected to make a positive trend in the GST collections.

What is the need for caution?

• Trend - Usually in the last month of the financial year, people try to pay arrears of some of the previous months also.
• So, April month’s revenue cannot be taken as trend for the future.
• However, even delayed compliance is a welcome ‘new normal’.
• Compliance - Tax compliance also still remains a problem.
• Out of around 87 lakh who were eligible to file GSTR 3B returns, only around 60 lakh had actually filed.
• Evidently, the compliance rate is just 69.5%.
• Also, out of around 19 lakh composition dealers, only around 11 lakh have filed their quarterly, which is just around 59%.
• The total tax paid by composition dealers is only Rs. 579 crores, which is very low.

What lies ahead?

• It is now essential to allow the reform to stabilise for increased tax compliance.
• Making constant changes would disturb this development.
• The government has to investigate in detail the low filing of returns from the composition dealers and address it.
• In its next meet, the GST Council is expected to unveil a new and simplified return filing format.
• This can be hoped to increase the compliance.
• These aside, a sustained revival in consumption and investment demand is essential, which policymakers need to focus on.

Source: The Hindu