“Crossing the Rs 1 trillion figure in GST collections a day ahead of the Union Budget would provide some confidence in being able to move closer to the revenue targets,” said M S Mani, partner, indirect tax at Deloitte India.
However, the revenue impact of reduction in GST rates on items the GST Council approved in December has not been factored in yet, since the rate cuts became effective from January 1, while the collection pertains to December, 2018. The rate cuts would result in a revenue loss of Rs 5,500 crore a year, then Finance Minister Arun Jaitley had said.
However, Mani said the January revenue numbers indicate that previous rate reductions (July) have resulted in increased revenues and compliance with a lag. If we consider that the GST collection in January stands at Rs 1 trillion, the total collection in April 2018 to January 2019 would be close to Rs 9.7 trillion. To meet the annual budgeted expectation of nearly Rs 12.5 trillion from GST till April 2019, the government needs to collect Rs 2.8 trillion in two months.
As a result, against the average monthly collection of Rs 97,100 crore in ten months, the required revenue strike rate for the next two months would be Rs 1.4 trillion, 44 per cent higher than the monthly average.
Despite the imminent shortfall, experts were hopeful due to increased revenue in January. Abhishek Jain, tax partner at EY India, said, “The increased GST collection is overwhelming and quite positive for the economy.”
Looking at the Centre’s revenues, the CGST collection till November 2018 stands at Rs 2.97 trillion according to data maintained by the Controller General of Accounts (CGA). Adding Rs 43,851 crore collected as CGST in December 2018 (according to press release) and assuming Rs 50,000 crore of CGST collection in January (considering the fact that unallocated amount in IGST account is minimal), the CGST accumulated in 10 months would touch Rs 3.9 trillion.