GOING STRONG
Collection goes past ~1-trn mark for fifth consecutive month
Goods and services tax collection surpassed the ~1 trillion-mark for the fifth consecutive month, touching ~1.13 trillion in February, according to provisional data released by the government on Monday.
The robust mop-up could partially be attributed to the government’s drive against GST evaders and fake bills, apart from tightened compliance measures and overall improvement in the economy. GST collection grew seven per cent over the corresponding period last year, when it was ~1.05 trillion, and was partially lower than the record of ~1.19 trillion achieved in January, data released by the Ministry of Finance showed. Collections posted growth for the sixth consecutive month.
These collections mostly account for transactions done in January. Till now, GST revenues have crossed ~1.1 trillion five times since its introduction. “The GST revenues crossed ~1 trillion-mark fifth time in a row and crossed ~1.1 trillion third time in a row post pandemic… This is a clear indication of the economic recovery and the impact of various measures taken by tax administration to improve compliance,” the ministry said.
The government attributed the robust mop-up to closer monitoring against fake billing, deep data analytics using data from multiple sources, including GST, income tax and Customs IT systems, and effective tax administration.
“While the growth of GST collections eased mildly in February, it remained healthy, in line with the consolidation in the momentum of economic activity observed across a variety of lead indicators. Subsequently, a favourable base effect is likely to result in the CGST collections expanding by 18-23 per cent in March,” said Aditi Nayar, principal economist, ICRA Ratings.
In February, revenue from import of goods posted 15 per cent growth, while that from domestic transaction (including import of services) grew by five per cent, compared with the previous year.
In October, the government introduced e-invoicing for firms with a turnover of ~500 crore and above. This was extended to entities with turnover of ~100 crore from January 1. The government also made registration norms more stringent while tightened rules for tax credits.
Key segments of GST collections yielded marginally less in February than in January. For instance, CGST collections were ~21,092 crore, as against ~21,923 crore in January. SGST mop-up was ~27,273 crore in February, as against ~29,014 the previous month. However, compensation cess was higher at ~9,525 crore, as against ~8,622 crore the previous month.
“In addition to the stabilisation of economic activities, the continuing trend of high GST collections for the past few months is also on account of the data analytics approach adopted by the authorities, which has led to significant detection of evasion,” said M S Mani, senior director, Deloitte India. “With the gradual opening up of the services sectors, economic activity is expected to pickup, leading to improved collections in the next month as well,” added Mani.
In addition to regular settlement of ~55,253 crore as integrated GST settlement, the Centre has also settled ~48,000 crore as IGST ad-hoc settlement in the ratio of 50:50 between the Centre and states/union Territories, resulting in ~67,490 crore for CGST and ~68,807 crore for the SGST.
“The settlement of IGST of ~48,000 crore between the Centre and the states, will adversely impact the net CGST+IGST revenues of the Centre in February, resulting in a moderation in the growth of its gross and net tax revenues in that month. This could be a key reason why the FY21 RE implicitly built in a contraction in CGST +IGST of 27 per cent in Q4 FY21,” said Nayar.
Around 10 states and UTS posted reduction in collections in February, including Delhi and Chandigarh, which saw contractions of three per cent and 14 per cent, respectively.