Goods and services tax (GST) collections breached the Rs 1-lakh crore mark in July 2019 at a time when debate on the economic slowdown is flaring up. At Rs 1.02 lakh crore, GST collections rose 6 per cent and 2 per cent, respectively compared to the figures in July 2018 and June 2019. However, Rating agency Crisil recently revised downwards the gross domestic product (GDP) target for 2019-20 to 6.9 per cent from 7.1 per cent earlier. That said, the monthly GST collections crossing the Rs-1 lakh crore in three of the four months of the current fiscal indicate talks of economic slowdown could be blowing out of the proportion. The monthly average has been Rs 1.04 lakh crore so far compared to Rs 98,114 crore during 2018-19.
So, are rising collection figures reflecting the true state of the economy or highlighting a contradictory trend?
The answer lies in government's budgeted target. The average monthly collection is still lower than Rs 1.06 lakh crore required for meeting the government's budgeted target for the year for Central and Integrated GST.
Experts believe monthly GST collections are barely touching the Rs-1 lakh crore mark precisely due to the economic slowdown, else the numbers could have been much better.
"Collections are hovering around Rs 1 lakh crore a month on account of the economy slowing down, otherwise it should have been more. Since GST is based on the price charged, lower domestic inflation and import values would have resulted in muted collections," MS Mani, senior director, Deloitte India says.
According to him, improved collections over the last year could be due to an increase in compliance thanks to GST Council periodically making rates and procedures reasonable.
The total number of GSTR 3B returns filed for the month of June up to July 31, 2019 stand at 75.79 lakh compared to 74.38 lakh for the month of May up to June 30, 2019. Till September last year the number of returns filers used to be around 67 lakh.
So, while increased compliance might have been pushing GST collections beyond Rs-1 lakh crore mark, the slowdown in the economy is resulting in collections being much lower than the required Rs 1.06 lakh crore.
According to a Kotak Economic Research report, the required run-rate (average monthly collection) for the rest of 2019-20 is now around Rs 1.14 lakh crore. At the current run-rate, the government could see a shortfall of Rs 1.8 lakh crore in GST collections.