Gross Goods and Services Tax (GST) revenues in August fell to ₹1.12 lakh crore from ₹1.16 lakh crore in July, the Finance Ministry said on September 1, terming it an indicator that the economy is in the midst of a ‘fast’ recovery.
The August GST revenues are 30% higher than the same month a year ago but 3.75% lower than July 2021. “Even as compared to the August revenues in 2019-20 of ₹98,202 crore, this [₹1,12,020 crore collection] is a growth of 14%,” the Finance Ministry said, suggesting that GST revenues have gone past their pre-pandemic levels.
Revenues from domestic transactions (including import of services) were 27% higher in August year-on-year. GST collections had fallen below the ₹1 lakh crore mark in June due to the second COVID-19 wave after a nine-month streak above that threshold.
“With the easing out of Covid restrictions, GST collection for July and August 2021 have again crossed ₹1 lakh crore, which clearly indicates that the economy is recovering at a fast pace,” the Ministry said.
Economists are not too convinced. ICRA chief economist Aditi Nayar said the sequential dip in GST revenues ‘belied the healthy improvement in the e-way bills to a daily average of 2.1 million in July 2021 from 1.8 million in June 2021, which was reflective of the lifting of restrictions especially across the Southern States’.
“The dip in GST collections, lower-than-expected core sector growth, and moderation in the August manufacturing PMI suggest that some caution is warranted regarding the strength of the recovery that is underway in the ongoing quarter,” she said.
“We expect GDP growth in the ongoing second quarter of 2021-22 to range between 7.8%-8.8%, with the absolute level of GDP to continue to trail the pre-pandemic level as the services sector struggles to catch up with the rest of the economy,” the rating agency’s economist added.
But the government exuded confidence that the ‘robust GST revenues are likely to continue’ in the coming months as well, as ‘economic growth’ and anti-evasion activities, especially against ‘fake billers’ have been contributing to the enhanced GST kitty.
Rajat Bose, partner at Shardul Amarchand Mangaldas & Co., said the upshot from the latest numbers was the healthy 30%-plus increase in GST in manufacturing states like Tamil Nadu, Maharashtra and Karnataka.
Of the ₹1,12,020 crore revenues in August, Central GST was ₹20,522 crore, State GST ₹26,605 crore, and Integrated GST stood at ₹56,247 crore (including ₹26,884 crore collected on import of goods). Compensation Cess ₹8,646 crore was collected, of which import of goods contributed ₹646 crore.
“The total revenue of Centre and the States after regular and ad-hoc settlements in the month of August’ 2021 is ₹55,565 crore for CGST and ₹57,744 crore for the SGST,” the Ministry said.
EY India tax partner Abhishek Jain said the collections are for the supplies made in the month of July, when lockdown restrictions were relaxed for most parts of the country. “With increasing rate of vaccination and business supplies picking up the uptrend is expected to continue in coming months,” he noted.