GST mop-up may ease in Dec, show e-way bills
Electronic permits raised for shipment of goods in Nov, Dec suggest moderation
NEW DELHI: India’s goods and services tax (GST) receipts may moderate in December, easing from sustained growth since June, including in November that saw the second-highest tax collections since the nationwide tax regime was introduced more than four years ago.
Electronic permits raised for shipment of goods within and across states in November and early December suggest moderation in transactions compared to October, according to data from GSTN, the company that processes tax returns. Generation of e-way bills recorded steady growth from a daily average of 1.3 million in May to 2.3 million in October, before moderating to 2 million in November. In the first five days of December, data showed that 2.1 million e-way bills were raised on average.
Taxes for November transactions will be collected in December. E-way bill data is one of the lead indicators of economic activity tracked by analysts.
GST collections of central and state governments, which were hit due to covid-related restrictions during the pandemic’s second wave earlier this fiscal, have been rebounding since June. Collections grew from ₹92,000 crore in June to ₹1.31 trillion in November, the second-highest since GST was rolled out on 1 July 2017. E-way bill generation has been on a steady rise with the resurgence of economic activity and got amplified in October largely owing to the high demand during Diwali and other festivals, said Saket Patawari, executive director, indirect tax at Nexdigm, a tax consultant. “However, the slight decline in e-way bills reflects the moderation after the festive season, and with a higher number of holidays towards the year-end, the same could continue in December as well,” Patawari said.
Experts have already expressed concerns about the demand recovery and increased revenue collections during the festive season starting to lose steam. India’s electricity demand, another high-frequency indicator tracked by analysts, rose 2.2% in November, almost halving from October’s 4.1% growth, Reuters reported on 1 December. Industrial output for October has already shown signs of demand recovery in the economy being tentative. Consumer durables output extended its contraction for the second consecutive month in October.
With the central government and most states reducing excise duties on petrol and diesel, which account for a major chunk of their revenues, the focus of tax authorities is expected to remain on ensuring compliance. The Central Board of Indirect Taxes and Customs (CBIC) has already urged field officers to focus on revenue collection efforts and take all possible steps in the remainder of this fiscal to improve collections.