March e-way bills hint at record rise in GST collections
Electronic permits for goods shipped within and across states in March have shot up to 78.1 million, the highest since November 2020, indicating that Goods and Services Tax (GST) collections could hit an all-time high for April.
Data from GSTN, the company that processes tax returns, showed that in March, e-way bill generation jumped 13% from February. Since tax returns for sales in March will be filed and taxes paid in April, this could indicate a jump in GST revenue in the first month of the new year, experts said.
“Normally the last month of the financial year sees businesses trying to conclude annual sales commitments, and always sees a spurt in sales. The other time of the year when we see a spurt is the festive season during Deepavali,” said Muralidharan R, partner, Deloitte India.
GST collections had touched the highest level so far in March at ₹1.42 lakh crore, official data showed on April 1.
E-way bill data shows actual goods shipment above a threshold that has taken place in a month. S&P Global India manufacturing purchase managers index (PMI), based on a survey of 400 producers, had suggested on April 4 a further improvement in the health of the manufacturing sector in March, though its pace had moderated. PMI data for March also suggested a further upturn in production volumes for the ninth month in a row.
The projected improvement in GST revenue collection comes as good news for not only policy makers as it eases the pressure on revenue mobilisation through non-tax measures such as divestment but also state governments which are likely to lose GST compensation from June. This trend is also likely to be a key input for the central and state governments while considering further rationalisation in the GST slabs and rates for revenue augmentation. Two ministerial panels appointed by the GST Council are currently working on GST rate rationalisation and on improving the efficiency and productivity of the indirect tax system.
One factor that has contributed to revenue growth is the extensive use of technologydriven oversight of economic activity.
From April 1, the government has widened the scope of the e-invoicing requirement on business-to-business transactions to cover all businesses with ₹20 crore sales and more, down from ₹50 crore earlier. The indirect tax buoyancy is also rubbing off on direct tax collections as corporate sales get reported more accurately. Direct tax collection for FY22 has touched nearly ₹14 trillion, exceeding revised estimates, Mint reported on Tuesday. India’s economy is projected to have grown at 8.9% in the justconcluded financial year after a 6.6% contraction in FY21.