Centre to see dip in revenue receipts
Electronic permits for transportation of goods contracted 17.5% in April
With the second wave of pandemic bringing down economic growth projections for this fiscal, the union government is staring at a major challenge on revenue receipts.
The decline in electronic permits raised for goods transportation in the first half of May and the moderating trend in Goods and Services Tax (GST) receipts from imported items seen in April signal to an impending dip in tax revenues, according to experts. Sobering expectations of economic growth is also likely to hit June advance tax collections of the Income Tax department.
The Reserve Bank of India (RBI) had on Monday said in its bulletin that the biggest toll of the second Covid wave was in terms of a demand shock—loss of mobility, discretionary spending and employment, besides inventory accumulation, though the aggregate supply was less impacted.
Indicating the impact, rating agencies have already slashed their projections for FY22. However, given that the lockdown like restrictions imposed are region-specific and less intensive than last year’s, the economic impact in the June quarter could be much less than seen in last fiscal. Moody’s Investors Service last week slashed its FY22 economic growth forecast for India from 13.7% estimated earlier to 9.3%, citing negative impact of the second wave of pandemic.
Signalling the immediate impact, electronic permits generated by businesses for transportation of goods contracted 17.5% in April to 5.87 crore from the previous month. On an average, over 12 lakh e-way bills were raised in the first fortnight of this month till 16
May, compared to 19.5 lakh in April, according to data available with the GSTN Network.
However, average e-way bills raised in May this year is more than the 8.4 lakh seen last May. Growth in Goods and Services Tax (GST) receipts from imports (IGST) too clawed down in April after three months of growth since January. IGST receipts from imports stood at ₹29,599 crore in April, after touching ₹31,097 crore in March, a near 5% slip. Non-oil, non-gold imports moderated by 3.4% in April to 28.61 billion from the previous month. Yearon-year
comparisons could be misleading as the country was in a national lockdown early in FY21.
There is no doubt that the second wave of the pandemic has disrupted trade and businesses with state-wide restrictions on movement of non-eseasy sential goods and persons, shipping delays due to non-stop demands and higher freight costs and limited capacity operations for domestic manufacturing units, said Saket Patawari, Executive Director–indirect Tax, Nexdigm, a consultancy. These factors could result in gradual slowdown in the economy and we could see moderate GST collections in the next two-three months, said Patawari.
Experts said the silver lining was that economic activity has not come to a halt now as had happened in the initial part of last fiscal. “What could hit GST collections is that some sectors have been very badly hit such as services, hotel, travel, auto and the drop in their business will bear on collections in the coming months unless there is a strong revival that takes place in the near term and vaccines take off in a big way. Consumption will be impacted as individuals will remain cautious as fears of a third wave rise,” said Gupta.