The Goods and Services Tax (GST) collections for October grossed Rs 1.05 lakh crore, the highest so far in the financial year. That's 10 per cent higher than the collections in the same month last year, which stood at Rs 95,379 crore. Does it mean the Indian economy and industry performance has reached Pre Covid-Era? Not entirely, but it may not be time to celebrate.
What the government says
The department of revenue says that the growth in GST numbers - crossing the Rs 1 lakh crore mark for the first time since April - shows clear signs of recovery.
Officials point out that 21 per cent growth in the number of e-Way bills shows that manufacturing is happening and goods are moving.
They also say that the growth in GST revenue as compared to that in the months of July, August, and September 2020 of -14 per cent, -8 per cent, and 5 per cent respectively clearly shows the trajectory of recovery of the economy and, correspondingly, of the revenues.
It is true that the GST collections in July, August, and September this year stood at Rs 87,422 crore, Rs 86,449 crore, and Rs 95,480 crore, respectively. Revenues from imported goods were 9 per cent higher in October, signalling improvement in demand.
Of the gross GST revenue of Rs 1,05,155 crore collected in October, the Central GST is Rs 19,193 crore, state GST stands at Rs 25,411 crore, integrated GST is Rs 52,540 crore which includes Rs 23,375 crore collected on import of goods and cess is Rs 8,011crore including Rs 932 crore collected on import of goods.
The government has settled Rs 25,091 crore to CGST and Rs 19,427 crore to SGST from IGST as regular settlement. The total revenue earned by the central government and the state governments after regular settlement in the month of October 2020 is Rs 44,285 crore for CGST and Rs 44,839 crore for the SGST.
The total number of GSTR-3B Returns filed for the month of October up to 31st October 2020 stands at 80 lakh.
Whilethe increase in the October 2020 collections as compared to October 2019 to an extent of +11 per cent is noteworthy, it should have been much higher if the economy and business sales had returned to normal.
Let us understand the reasons for saying this:
1. Normally October GST collections relate to sales that happened in September 2020. That means September 2020 sales are about Rs 1.05 lakh crore.
2. The total GST collection between April - October 2019 is around Rs 7 lakh crore and the same between April - October 2020 is about Rs 4.5. lakh crore. This means it is about 35 per cent less. In fact, it is not fair to compare the two years at all.
3. The near "total unlock phase" with unrestricted movements, e-pass abolishment, and public transport resumption happened from September 1 onwards. Many companies raised sale invoices in September by pushing out their finished products, which they had planned in March itself, during September and also executed various site activities for which deliveries were made in March.
4. The government has also allowed companies to defer their GST payments. This has resulted in delayed payments and in some cases interest component too as part of the October revenue figures. In fact, several MSMEs that could not pay GST on time paid as high as 18 per cent interest, which also resulted in additional GST earnings last month.
To summarise, had normalcy returned earlier, the GST collections would have been much higher, close to Rs 1.50 lakh crore at least.
We need to wait for GST data collection in November (which is October sales) and December (which is November sales). If we surpass over Rs 1,30,000 crore in November and December, we can confidently say that we have reached an economic rebound to pre-COVID-19 days. If that happens, we can catch up with the loss of revenue in the first six months of the year over the next 6 months (of the year) to have overall revenue as planned.
But does it appear to be so? Not very clear yet.
It all depends on the biggest question hanging on the potential second COVID-19 wave fear, which is already resulting in a second lock down in Europe.
Such a second wave could impact exports and imports of critical parts for local manufacturing, and increased as well as sustained festival sales during the October-November period.
We need to wait until December and should not start celebrating as yet, looking at October GST collections and projects is as near normal a situation.
(The author is convenor, Consortium of Indian Associations.)