Apart from a shortfall of nearly `35,000 crore in direct tax revenue, the Centre seems to have suffered a larger deficit of `60,000 crore or thereabouts in its share of goods and services tax (GST) revenue also for the fiscal year (FY19) that ended on Sunday.
Although it apparently made savings to the tune of `14,000 crore under the PM-Kisan programme against the budgeted level (revised estimate or RE), the massive tax revenue deficit must have forced it to cut expenditure, including capex, and not pay a significant part of the dues on subsidies, etc, by the fiscal-end.
According to a government release on Monday, the total GST collections for February (collected in March) stood at `1,06,577 crore, the highest for any month since GST’s implementation.
As the revenue figures for the whole of FY19 (April-March) are now available, the Centre’s GST revenue in the year will be around `5.79 lakh crore, against the RE of Rs 6.43 lakh crore.
It may be noted that RE was a neat Rs 1 lakh crore lower than the Budget estimate made at the beginning of the year.
Amidst this massive shortfall, a relief will come to the Centre in the form of not having to spend some `40,000 crore surplus accrued in the compensation cess fund, half of which it can legitimately lay hands on while balance must go to the states.
In its bid to meet the fiscal deficit target of 3.4% of the GDP, the Centre may account for states’ share of the surplus too for the FY19 Budget as it has the option to release the funds later.
Devendra Kumar Pant, chief economist at India Ratings & Research said, “.. despite monthly fluctuations, the GST collections trend since August 2018 has been gradually increasing. On a monthly average basis, GST collections in FY19 grew 9.2%, lower than the nominal GDP growth of 11.5%. While, GST is settling, on a quarterly basis, GST collections’ growth in Q4FY19 increased to 14.3% from 12.1% in QF3Y19.”
For its revenue receipts from GST, the central government counts CGST, unsettled IGST and compensation cess as part of its collections. After provisional and regular settlement of IGST, the central GST for March came in at `47,614 crore. This takes the CGST for FY19 to nearly `4.6 lakh crore from `4.11 lakh crore of CGST collected during the April-February period, as per the CGA data. This is much below the revised CGST estimate of `5.03 lakh crore.
Similarly, the floating IGST for March stood at `19,531 crore after regular settlement from `50,418 crore collected in the month. Further, a `20,000 crore from the balance of IGST was provisionally settled in equal proportion to both the Centre and states. “GST revenue for the last quarter in 2018-19 is 14.3% higher than same period last year. Monthly average of GST revenue during 2018-19 is `98,114 crore, which is 9.2% higher than FY2017-18. These figures indicate that the revenue growth has been picking up in recent months, despite various rate rationalisation measures,” the government said.
“Overall, this indicates that GST collections are increasing steadily with compliances settling in, increased use of data and intelligence by the government including the introduction of E-way bill system last year. However, it’s worth noting that the projected growth in GST collections for 2019-20 is around 20% over 2018-19. Achieving this steep target would call for a substantial increase in the tax base by plugging the existing leakages, as room for the increase in tax rate seems limited,” Pratik Jain, partner and leader indirect tax at PwC India, said.
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Source: Financial Express