Tamil Nadu’s Goods and Services Tax (GST) collections declined 15% to ₹4,976 crore in June 2020 from ₹5,881 crore in June 2019, data released by the Union Finance Ministry on Wednesday showed. The collections were hit by the lockdown imposed due to the COVID-19 pandemic, which in turn hurt consumption.
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In June, returns of February, March, and April 2020 have also been filed in addition to some returns of May 2020 since the government has allowed a relaxed time schedule for filing of GST returns. Some returns of May 2020, which would have otherwise got filed in June 2020, will get filed during the first few days of July 2020, the Ministry said.
“The impact has been on multiple sides. There has been a fall in consumption because of the lockdown. This is felt both on the petrol and diesel side as well as on regular GST collections. Even where consumption has taken place, tax collections has not been remitted, because an extension was given. The remittance has been getting delayed, so it is a combination of both factors,” a senior State government official said.
With a further lockdown now imposed, this deferral in payment is likely to continue for some more time, he added.
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Chief Minister Edappadi K. Palaniswami recently said that with industries and businesses remaining shut, the State would sustain a shortfall in revenue of about ₹12,000-₹13,000 crore a month as per the Finance Secretary’s projections.
Abhishek Jain, tax partner, EY, an auditing firm, said the fall in revenue of States would put focus on the Centre’s obligations to compensate States for any shortfall in GST revenue collection. This issue gets further deepened with muted compensation cess collections, he added.
The senior government official said Tamil Nadu has been urging the Centre to fulfil its obligations on compensating for GST revenue shortfall, by looking at raising resources through other alternatives like borrowings.