GST receipts short of target for third month in a row

Goods and services tax (GST) collections for December did not deliver much comfort to the government ahead of the Budget, although these rose after two months of declines.

GST collections at ~867.03 billion were less than the target of ~910 billion combined for the Centre and states.

The figures, released by the finance ministry on Thursday, highlighted subdued collection in the composition scheme— a flat rate provided to taxpayers who do not seek input tax credit. The government thinks evasion in this scheme will be plugged by the e-way bill, which will be introduced for the interstate movement of goods on February 1.

December was the third straight month when the GST revenue was below ~900 billion. The tax yielded ~808.08 billion in November and ~833 billion in October. GST receipts have fallen short of target in August, October, November and December.

The target of ~910 billion is based upon the Centre’s budget estimates for 2017-18 and presumptive growth figures for states for grant of compensation in the case of a revenue shortfall after switching to the GST.

“The increase in revenue collection is on expected lines and means that the GST is stabilising and transition issues are waning. Anti-evasionmeasures being taken by the government are likely to result in a further increase in revenue in the January-March quarter,” said Pratik Jain, leader, indirect tax, PwC.

Finance Secretary Hasmukh Adhia had earlier said the indirect tax collection target would be met for the current fiscal year after the GST Council decided to split ~350 billion of the integrated GST equally between the Centre and states.

The Budget has targeted indirect tax collections of ~9.26 trillion and the government has collected ~5.87 trillion in the first nine months of 201718. Direct tax collections rose over 18 per cent till January 15 against the budget estimate of 15 per cent growth. Disinvestment proceeds will also yield ~200 billion more than the budget projections.

The Centre will, however, face difficulty in non-tax revenues because of low dividend by the RBI and spectrum sale receipts. The government is expected to lean on public sector units to narrow this gap.

So far as the composition scheme is concerned, ~4.21 billion was paid by assessees in the second quarter, marginally higher than ~3.36 billion in the first quarter. Officials, sensing evasion, said collections would improve once the e-way bill was introduced.

Compliance has been improving with 66.7 per cent of GST assessees filing returns in December against 64.3 per cent in November and 62 per cent in October. In the composition scheme, 54 per cent of assessees filed returns in OctoberDecember.