Virtual lockdown and closure of offices across states will have impact on GST collections in March and April even as taxpayers demand extension of date of filing of returns from March 20 to some other date.
Businesses across the board would operate at minimal level. Primarily, sectors such as travel, hotel and food will see a sharp fall in the business.
According to an SBI research report, the inoperability analysis for three sectors namely Transport, Tourism and Hotels shows significant impact on demand and hence output. "On an aggregate basis, we estimate that the impact of a 5 per cent inoperability shock could be 90 basis point on GDP from Trade, Hotel and Transport to Storage and Communication segment. It could be spread over 2019-20 and 2020-21, with a larger impact in the latter year."
The report further says on an average 25 million and 300 million people use airplanes and trains, respectively each month. "A 10 per cent reduction will lead to loss of revenue of Rs 3,500 crore on a monthly basis."
Trade, hotels, transport, communication and broadcasting were likely to generate Rs 33 lakh crore worth of value of services in the current financial year. This number might be revised downward, impacting GST collections from this segment.
GST is charged at 5 per cent on economy class airfare and 12 per cent on business class airfare, while GST on train fare is 5 per cent. The GST on hotel rooms with tariffs of up to Rs 7,500 per night is 12 per cent and the tax on room tariff of above Rs 7,500 is 18 per cent. Impact on transport, tourism and hotels would further impact sectors such as fuel minerals, electricity and water and rubber, plastic, coke and petroleum products.
All these would impact the GST collections immediately further squeezing the government's fiscal situation in the current financial year though finance ministry officials expects the impact of corona virus to be visible only in the next financial year. The government had a GST collection target of Rs 1.25 lakh crore in March. That looks unlikely now. In February, the monthly GST collection was Rs 1.06 lakh crore against the revenue department's target of Rs 1.10 lakh crore.
As per the central government's revised budget estimate, revenue from GST in the current financial year is likely to be Rs 6.12 lakh crore. Till January, the collection was around Rs 5 lakh crore.
Meanwhile, with most offices have been forced to work on minimal staff and many have asked their employees to work from home, many businesses would find it difficult to file returns on the due date - 20th March. There is now demand from some quarters that GST filing dates should be deferred.
"As the taxpayers short of staff as most of them are unable to report to offices, an extension of due date of payment of GST and filing of return is eagerly being awaited," says Pritam Mahure, a Pune-based chartered accountant.
Rajat Mohan, partner, AMRG & Associates, says though they are not facing any problem technologically, flow of data is a big issue. "There are no discussions around issues with the data that we have of our clients as they are shutting down offices. We are just pushing across the same to the servers and getting it filed," he says.