Wednesday, November 25, 2020
Home BUSINESS Economy GST revenues fall 41% in first quarter

GST revenues fall 41% in first quarter

Goods and Services Tax collections for the April to June quarter stood at ₹1.86 lakh crore, a 41% drop in comparison to the ₹3.14 lakh crore collected in the same period last year.

In the first clear indication of the COVID-19 impact on government revenues, the Finance Ministry has released monthly GST collections data for the first time since March, showing that revenues plunged during the lockdown. However, the June collections were more robust.

“The revenues during the financial year has been impacted due to COVID-19, firstly due to the economic impact of the pandemic and secondly due to the relaxations given by the Government in filing of returns and payment of taxes due to the pandemic,” said an official statement.

Tax filing

The Ministry had eased tax filing deadlines due to the lockdown, allowing businesses to file their March, April and May returns by the end of June.

GST collections for April crashed 72% to just ₹32,294 crore. By May, the contraction had narrowed to 38% in comparison to the previous year, with collections of ₹62,009 crore. June’s GST collections stood at ₹90,917 crore, only 9% lower than in June 2019.

However, the Ministry noted that, “During the month of June, returns of February, March, and April 2020 have also been filed in addition to some returns of May 2020 since 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 first few days of July 2020.”

“The GST collections while in the first quarter have obviously witnessed a substantial dip because of the current pandemic, however, the increasing trend in June inclines to a recovery being in line soon,” said Abhishek Jain, tax partner at Ernst and Young India. “With this shortfall and related dip in revenue for States as well, the Centre’s obligations to compensate States for any shortfall is an area of concern and this being further deepened with muted compensation cess collections.”

Of the ₹90,917 crore gross GST revenue collected in June 2020, the total revenue earned by the Central and State governments after settlement of IGST stands at ₹32,305 crore and ₹35,087 crore respectively. Cess collected during the month was ₹7,665 crore, including ₹607 crore collected on import of goods, according to the Ministry statement.

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