economy

GST collection looks set to hit record high in November

GST collection looks set to hit record high in November

NEW DELHI: Goods and Services Tax (GST) collection of central and state governments looks set to scale a record a high in November, indicates latest e-way bill data for October. E-way bills or electronic permits generated for goods transportation rose to an all time high of 73.5 million in October, showed official data from GSTN, the company that processes tax returns. This is higher than the 71.2 million permits raised in March which had led to the highest GST collection so far of ₹1.41 trillion in April. Taxes for transactions in a month are collected in the subsequent month. The surge in goods transportation permits confirms that festive demand is giving a strong push to economic recovery, in line with policy makers’ optimism that festive demand, sustained vaccination and robust farm sector growth will boost industrial recovery. GST receipts of ₹1.3 trillion in October for transactions in September were the second highest since the roll out of the new indirect tax regime in 2017, aided by a pick-up in economic activities. Google mobility trend for places such as supermarkets, food warehouses, farmers markets, specialty food shops and pharmacies for 29 October showed a 51% improvement over the baseline calculated using data from a five-week period starting 3 January 2020. October GST receipts have encouraged experts to predict that the Centre may exceed its FY22 budget estimate of ₹5.3 trillion in central GST (CGST) by up to ₹500 billion. Improvement in GST collections and compliance are also expected to rub off on corporate tax collections. “October is the peak of festive season where purchases traditionally go up. The highest ever e-way bill issuance in October suggests that tax receipts in November could see a clear jump over that of October. Improved tax compliance, economic recovery, pent up demand after the second wave of the pandemic and policy measures to support economic growth have aided in this, said Abhishek Jain, tax partner at EY. Improvement in tax collections so far, with the ebbing of the second wave of the pandemic and the promise of further gains are set to ease pressure on central and state governments. Large state economies including Gujarat, Tamil Nadu, Uttar Pradesh, Delhi, Maharashtra and Punjab are major beneficiaries of GST compensation transfers from the central government and are facing a fiscal cliff once the compensation payments end in June 2022. For them, improving revenue collection trend will make it less onerous to meet their resource requirements. Already two ministerial panels are looking into ways of reworking GST structure and its administration to improve revenue collections. Download.

economy 2021-11-02 Livemint