Collections from the Goods and Services Tax crossed the ₹1 lakh crore mark in April, according to data released by the Finance Ministry on tax receipts that accrued in March but were payable in April. To be precise, the total revenue from the new indirect tax in April was ₹1,03,458 crore, the highest recorded in a single month since its implementation in July 2017. Finance Minister Arun Jaitley has called this a “landmark achievement” and a “confirmation of increased economic activity”. Separate data released last week suggest the number of registered tax-payers filing GST returns by the specified deadline has risen from 57% for July to nearly 63% for March. And since many had consistently failed to meet the deadline in the initial months of confusion over the online returns filing system, it is heartening to note that by the final month of the financial year, they had caught up on their past arrears too. Overall tax compliance for July 2017 is now over 96% of registered taxpayers who are required to file, and ranges from 92% to 80% for each month thereafter, till December. Further simplification of the returns, hanging fire for a while now, must be expedited to improve compliance. Though it referred to the record GST collections as a sign of an upswing in the economy, the government, to be fair, also stressed that this number may be driven by the human tendency to wrap up pending official dues at the last moment — which in this case is the last month of the financial year. Yet, even delayed compliance is a welcome ‘new normal’.
True, the revenue influx in April cannot be taken as a firm trend for the future. But given the tumult the GST caused in its initial months and the fear of high evasion levels that gripped officials when revenues tumbled after three months of ₹90,000 crore-plus collections, it is fair to say that the new tax system has ended its first three quarters on a robust note. By virtue of just the April inflows, the average monthly collection has gone from ₹89,885 crore in the first eight months to over ₹91,300 crore. This number is important, as by the government’s own reckoning the new regime needed to deliver about ₹91,000 crore a month to ensure that revenues lost by the Centre and the States under the earlier indirect tax system are covered. Fresh anti-evasion measures introduced in the past few weeks, such as the e-way billing to track movement of goods, could plug leakages to some extent. The government is keen to start matching tax credits claimed by businesses for inputs from suppliers. While these should boost GST revenues in the new financial year, nothing will beat fiscal stress better than a sustained revival in consumption and investment demand. Policymakers need to ensure that the uptick in car sales and demand for steel and cement is catalysed further.
