The collection of the goods and services tax (GST), a tax on consumption, has shown the first sign of recovery in business activities since the outbreak of the Covid-19 pandemic and the subsequent closure as of March 25 with a 4% YoY growth to Rs 95,480 crore in September and a 10.4% jump from the previous month, according to official data.
Interestingly, GST collection for September this year in Maharashtra, a key industrial state, remained almost stagnant during the corresponding period last year at 13.546 crore, according to data released by the Union Finance Ministry on Thursday. Karnataka saw a 5% contraction (Rs 6,050 crore) in the period.
Other major industrial states have shown positive revenue growth in September this year over the corresponding period last year. Tax collection for Haryana (4,712 crore) and Tamil Nadu (6,454 crore) increased by 15%, while Gujarat saw a 6% growth to 6,090 crore.
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Experts say the worst is over and collection is expected to increase in the coming months of festivals depending on the unlocking steps taken by various states. MS Mani, Senior Director at consultancy Deloitte India, said: “A modest 4% increase in GST collections compared to the previous year indicates that the economic recovery process is underway, with some key large states also reporting a increase in collections “.
The GST collection grew for the first time after contractions for six months in a row. Indirect tax collection, which has been trending down since March (8.4%) this year, plunged 72% in April to Rs 32,172 crore, the lowest since its launch on July 1, 2017. The lockdown 68-day hard from March 25 was also reflected in the May collection with an annual drop of 38% (Rs 62,151 crore). However, the revenue decline slowed to 9% in June (Rs 90.917 crore) mainly due to revenue from the lockdown period. Subsequently, annualized revenue collection fell 14.3% in July (Rs 87,422 crore) and 13% in August (Rs 86,449 crore).
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“Gross GST revenue collected in September 2020 amounts to Rs 95,480 crore, of which CGST [Central GST] is Rs 17,741 crore, SGST [State GST] is Rs 23,131 crore, IGST [integrated GST] is Rs 47,484 crore (including Rs 22,442 crore collected on importing goods) and Cess is Rs 7,124 crore (including Rs 788 crore collected on importing goods), ”said the statement from the Ministry of Finance.
The government has set Rs 21,260 crore to CGST and Rs 16,997 crore to SGST from IGST as regular settlement, it said. “The total revenue earned by central government and state governments after regular liquidation in September 2020 is Rs 39,001 crore for CGST and Rs 40,128 crore for SGST,” he added.
“During the month, income from import of goods was 102% and income from internal transactions (including import of services) was 105% of income from these sources during the same month last year,” he said.
Abhishek Jain, tax partner at consulting firm EY India said: “With a significant part of the economy resuming operations and international trade, as well as the pace, collections have shown decent growth. The increase in revenue indicates a return to normalcy in business operations and provides an overall optimistic outlook. ”
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