August GST collections likely to drop

The revenue mop-up from the goods and services tax (GST) for August is likely to be lower than the previous months. This is mainly due to the rate cuts effected in the last GST Council meeting and the lack of social events during the monsoon season. In a review meeting in Bengaluru on Saturday, Sushil Modi, member of the GST Council, said despite the shortfall, the council is confident of meeting the revenue target.

The revenue mopup from goods and services tax (GST) for August is likely to be lower than the previous months.

This is mainly due to the rate cuts effected in the last GST Council meeting and the lack of social events during the monsoon season.

In a review meeting held in Bengaluru on Saturday, senior member of the GST Council Sushil Modi said despite the shortfall, the council is confident of meeting the revenue target as it expects a jump in collections in the coming months.

“During the monsoon season in general and August in particular, there are less number of social events like marriages. Historically, tax collection in July, August and September goes down due to this reason,” Modi said.

“There is a likelihood that the reduction in GST rates on 88 consumer items from 28 per cent to 18 per cent, which was decided in the last GST Council meeting, may reflect in the returns,” he added.

The revenue from GST stood at ~939.60 billion in July, while it was at ~964.83 billion in June this year. The Central government requires around ~1.03 trillion of monthly collections to meet its revenue target in which case it doesn’t have to compensate the states for any shortfall.

However, the senior member was confident of higher gross collections in the coming months with implementation of the eway bill apart from tax deducted at source (TDS) and tax collected at source (TCS) provisions from October 1 this year.

Despite opposition from e-commerce operators, the council has decided to go ahead with the implementation of TDS and TCS rules from next month.

After implementation of GST from July last year, many new tax payers have come under the fold of this tax regime with addition of around 5 million new tax payers. According to the council, the number of returns filed till date stood at 157 million.

On the issue of putting petrol and diesel under the GST umbrella, Modi said that it is not the opportune moment to do so.