GST collection dips 11% in March; steeper drop expected in April, May
Dipak Mondal April 1, 2020
The GST collection in March has come down to Rs 97,597 crore from Rs 1.06 lakh crore in February, a drop of almost Rs 8,000 crore or 7.5 per cent. This is 11 per cent lower than the Rs 1.07 lakh crore collected in March 2019.
Since tax dues of February were collected in March, the drop is not on account of lockdown due to coronavirus, and is largely due to sluggish business growth in February. The impact of coronavirus lockdown will be reflected only in April and May 2020. According to experts, the impact of the lockdown on GST collections in April and May could be much worse with April collections falling down to Rs 80,000 crore and May collections falling by 40-50 per cent.
"The lower than budgeted GST collections could be on account of the overall sluggishness in the economy in the past few months. As these figures relate to the transactions in February, they may not have been influenced by the lockdown, whose impact may be visible next month," says M S Mani, Partner, Deloitte India
Various research firms and rating agencies have estimated that economic activities during the lockdown period would drop to 20-30 per cent level, and since two-thirds of the lockdown period falls in April, the impact would be visible more in the May. The lockdown began from March 25 and would continue till April 14, 2020.
Experts say the collection in April could be Rs 80,000-85,000 crore.
Sreejith Balasubramanian, India economist, IDFC AMC, says: "Given the number of GST-3B filers fell from 83.5 lakh in February to 76.5 lakh in March, with about Rs 8,000 crore fall in revenue, we could be looking at another drop of Rs 12,000-15,000 crore in April."
Rajat Bose, Partner, Shardul Amarchand Mangaldas & Co, also estimates the April collection to come down to Rs 80,000-85,000 crore as he feels the lockdown only came into force from March 25.
It is also interesting to note that the number of GST-3B returns filed in March came down to 76.5 lakh from 83.5 lakh in February. While it is difficult to explain the exact reason for the drop in the number of return filers, some experts suggest it could be due to offices and businesses scaling down their operations from second half of March.
Meanwhile, the total GST collection (both state and centre) in 2019-20 is Rs 12.22 lakh crore - just 3.8 per cent increase over Rs 11.77 lakh crore. The Central government might still fall short of the Rs 6.12 lakh crore revised budget estimate for GST collection in 2019-20.