A day ahead of the Union Budget that is likely to report a huge fiscal deficit, the government has got some cushion with the goods and services tax (GST) collections touching a record high of Rs 1.19 trillion in January. Since the collections were till 6 pm on January 31, some more money is expected to come into the government coffers for the month.
The GST collections surpassed the Rs 1 trillion mark for the fourth straight month due to economic recovery and largely because of the government measures to tighten its noose on tax evaders.
The GST collections grew by 8 per cent during the month on a high base of Rs 1.10 trillion in January last year and breached the earlier record of Rs 1.15 trillion achieved last month, data released by the ministry of finance showed on Sunday.
Collections posted growth for the fifth straight month in January, indicating reinstatement of normalcy in economic activity after months of disruption caused by the Covid-19 lockdown.
These collections mostly account for transactions done in December. The total number of GSTR-3B Returns filed for the month of January touched 90 lakh compared to 87 lakh in December.
The robust GST collections assume importance since the Centre’s fiscal deficit has already crossed the Budget Estimates by 45.5 per cent till December of the current financial year. While no one expects the government to rein in the deficit at 3.5 per cent of GDP as was projected in the Estimates, the robust collections will play a bit of role in narrowing the deficit in the wake of increased expenditure on health, muted disinvestment receipts and direct taxes.
“The GST revenues during January 2021 are the highest since introduction of GST and has almost touched the Rs 1.2 trillion mark.. The GST revenues above Rs 1 trillion for a stretch of last four months and a steep increasing trend over this period are clear indicators of rapid economic recovery post pandemic,” ministry of finance said in a release.
The ministry also attributed the record collections 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.
“In addition to the sustained economic revival witnessed in the past few months , the increased GST collections are also on account of the initiatives taken by the tax administration to curtail evasion, monitor input tax credits and build taxpayer profiles based on other databases,” said M S Mani, senior director at Deloitte India.
Tthe surge in GST collections observed during the past four months is expected to be sustained in the coming months of the current fiscal with more of service sector activities like aviation, hospitality, entertainment etc opening up across states since January 21, he said.
Directorate General of GST Intelligence sources said the authorities have arrested 274 persons so far in a nationwide drive against evaders, launched since mid-November, 2020. They said more than 2,700 cases have been booked against 8,500 GST-registered entities.
During the month, revenues from import of goods posted 16 per cent growth, while that from domestic transaction (including import of services) grew by 6 per cent compared to the same month last year.
The government in October introduced e-invoicing mechanism for firms with a turnover of Rs 500 crore and above. An anti-evasion measure, e-invoicing was extended to entities with turnover of Rs 100 crore from January 1 this year. The government has also made registration norms more stringent while tightening the rules for using tax credits recently.
The GST collections had crossed Rs 1 trillion mark in seven months of the previous fiscal.
All the segments of GST collections yielded more in January compared to December. For instance CGST collections rose to Rs 21,923 crore against Rs 21,365 crore, SGST mop increased to Rs 29014 crore against Rs 27,804 crore. The compensation cess was also higher at Rs 8,622 crore as against Rs 8,579 crore in the previous month.
Also integrated GST receipts for CGST stood at Rs 46,454 crore and for SGST stood at Rs 48,385 crore.
Till now, GST revenues have crossed Rs 1.1 trillion four times times since introduction of GST.
The average YoY growth in GST revenue over the first four months in the second half of the financial year has been 8 per cent as compared to (-) 24 per cent during the first half of the year.