Revenue collections from the Goods and Services Tax (GST) in September hit ₹95,480 crore, the highest in this financial year so far, indicating that economic activity is picking up steam in tandem with the gradual easing of lockdown restrictions necessitated by the COVID-19 pandemic .
September’s indirect tax collections were over 10% higher than August , 4% higher than the GST kitty in the same month a year ago and marked only the second time that the ₹90,000 crore mark was crossed this financial year.
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GST collections had been sliding after January 2020 when nearly ₹1.11 lakh crore came in . March 2020, by the end of which the national lockdown was imposed, recorded GST inflows of ₹97,597 crore . April and May saw the worst hit, bringing in little over ₹32,000 crore and ₹62,000 crore, respectively.
“The gross GST revenue collected in the month of September, 2020 is ₹95,480 crore, of which Central GST is ₹17,741 crore, State GST is ₹23,131 crore, Integrated GST is ₹47,484 crore [including ₹22,442 crore collected on import of goods] and cess is ₹7,124 crore [including ₹788 crore collected on import of goods],” the Finance Ministry said in a statement on Thursday.
Economists were cautious about reading the healthier numbers as a sign of a sustainable rebound from the sharp 23.9% contraction in the country’s gross domestic product in the first quarter of 2020-21.
Principal economist at rating agency ICRA Aditi Nayar said the uptick in GST collections had come as a relief, although it had likely been driven by ‘a combination of pent up demand and inventory restocking, and thus its sustainability remains unclear.’
“Overall, the high frequency data available for the month of September 2020 confirms that a fragmented recovery is under way. We continue to expect the GDP contraction to narrow appreciably to 12.4% in the second quarter,” Ms. Nayar said.
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“With a significant part of the economy resuming operations and international trade as well resuming pace, the collections have shown decent growth,” said Abhishek Jain, EY tax partner. Revenues from import of goods were at 102% and revenues from domestic transactions which include import of services were at 105% of the revenues from these sources during September 2019.
Among the larger States, Rajasthan and Tamil Nadu saw the highest growth in GST inflows at 17% and 15%, respectively, compared to September 2019. Andhra Pradesh saw a 8% growth, Gujarat 6%, while Maharashtra and Uttar Pradesh saw a flat trend and collections in Karnataka dropped 5%, from a year ago.