The economic impact the ‘second wave’ of Covid-19 showed on Goods and Service Tax (GST) as collections for June 2021 fell to Rs 92,849 crore, the Finance Ministry said on July 6. This is the first time in nine months that monthly GST collections have slipped below the Rs 1 lakh crore mark.
The last time this happened was in September 2020, when GST collections were Rs 95,480 crore. The June 2021 collection is the highest in ten months, since August 2020.
“The GST collection for June 2021 is related to the business transactions made during May 2021. During May, most of the States/UTs were under either complete or partial lock down due to COVID,” the Finance Ministry said in a statement.
“The e-way bill data for the month of May 2021 shows that during the month, 3.99 crore e-way bills were generated as compared to 5.88 crore in the month of April 2021, down by more than 30 percent,” it said.
The June figure compares to GST collection of Rs 1.02 lakh crore in May. In April, GST collections came in at Rs 1.41 lakh crore, the highest ever since the introduction of the nationwide tax.
In June, Central GST collection was Rs 16,424 crore, State GST was Rs 20,397, Integrated GST was Rs 49,079 crore, while cess was Rs 6,949 crore.
Collections not a concern
Analysts said that while the monthly collection had come below the Rs 1 lakh crore mark after a long time, it was not a matter of concern.
“While the collections are lower than Rs 1 lakh crore, which had become the norm for the past few months, considering the fact that it relates to transactions in May 2021 which was badly impacted by the pandemic, it would be considered as a very satisfactory collection,” said MS Mani, Senior Director at Deloitte India.
Mani said that the latest numbers reflected the economic resilience shown during the recent pandemic phase.
Aditi Nayar, Chief Economist with ICRA Ltd said that the pace of the moderation was muted as compared to the extent by which the GST e-way bills had fallen in May 2021 versus April 2021 as the state level restrictions had widened.
“Despite declining to a 10-month low, the June 2021 GST collections provided a positive surprise,” Nayar said.
“The GST collections in Q1 FY2022 are higher than the pre-Covid level of Q1 FY2020. This will buffer the revenue situation of the Centre and the states, which should support a ramping up of expenditure going ahead,” she said.
In its release, the Finance Ministry said that with reduction in caseload and easing of lockdowns, the e-way bills generated during June 2021 was 5.5 crore which indicated recovery of trade and business.
“The daily average generation of e-way bill for the first two weeks of April 2021 was 20 lakh, which came down to 16 lakh in last week of April 2021 and further to 12 lakh in the two weeks between May 9 and May 22,” it said.
“Thereafter, the average generation of e-way bills has been increasing and has reached again to 20 lakh level since week beginning June 22. Therefore, it is expected that while the GST revenues have dipped during the month of June, the revenues will see an increase again from July 2021 onwards,” the statement said.