May 31, 2023

After the implementation of the historical GST Act on 1st July, the government revenue has exceeded the estimation of Rs 91,000 crores in the first month by Rs 2283 crores from just 64.42per cent of the total taxpayer base.Tax collections for July are likely to go up further when all the tax payers file returns. As of now, 38.38 lakh taxpayers filed returns. As per registration records, 59.57 lakh businesses would file return for July.

Given that GST is in the process of stabilising, the collection of over Rs 92,000 looks encouraging. The government is hopeful that GST revenues will stay on course for the remaining eight months of 2017-18.Of the Rs 92,283 crore tax collected, approximately Rs 14,894 crore has come in the form of Central GST(CGST), Rs 22,722 crore from State GST (SGST), Rs 47,469 crore from Integrated GST(IGST) and Rs 7,198 crore from compensation cess levied on demerit and luxury goods. This is when a third of the total tax payers are yet to submit their returns.

Since GST is a destination-based consumption tax, Centre will ensure that all states get their revenue share based on actual consumption of goods in each state. The cess on luxury and demerit goods is aimed at compensating states for any revenue shortfall due to GST. As per the sharing of tax revenue is concerned, the Centre will compensate the states for any revenue loss calculated on a base year of 2015-16 and assuming a revenue growth of 14 per cent.The government is yet to asses if the individual states have met their targets.

IGST will be shared between CGST and SGST based on the extent to which it has been used for payment of the both. This allocation will be based on the cross-utilisation report to be achieved from the GST Network (GSTN). Of the 87 lakh registered on the GSTN portal, nearly 71 lakh businesses have migrated from the previous regime, while the others are new taxpayers.

The main central taxes that coalesced into GST are excise duty, service tax, CVD and SAD, while the state VAT has also been included in it along with various other local taxes.In the last year, Indirect tax receipts from central excise, service tax and customs duty totalled Rs 8.63 trillion. Excise duty collection was Rs 3.83 trillion while the collection from service industry was Rs 2.54 trillion. The total tax revenue collection was Rs 17.01 in the financial year 2016-17.Budget estimates thatRs 19.11 trillion tax revenue will be collected in financial year 2017-18, an 11.75 per cent increase from the last financial year.

Niti Aayog, the government’s highest planning body stated that due to an efficient tax system post-GST, tax revenue is expected to grow to Rs 26.48 lakh crore by 2019-20 from Rs 17.03 lakh crore in 2016-17. It predicts a 14 per cent growth in 2017-18, followed by 16 per cent and 17 per cent in the next two financial years.

The Finance Minister Arun Jaitley said that the government will adopt a ‘carrot-and-stick policy’ on taxation, saying post GST tax authorities will go after evaders whose invoices do not match tax payment. He highlighted that the government over the last 2-3 years has made tax evasion difficult and GST will help expand the direct tax base and increase indirect tax collection. Under GST, in order to claim benefit of input credit, businesses have to disclose the bulk of transaction in the form of invoice.

Post release of the revenue collection data, the Finance Minister said"In sum total we seem to be comfortable… the red line seems to have been crossed." The minister however insisted that it should be accounted that GST collection included levied cess. So, with collection exceeding expectation, the Government seems to be in a comfortable position. Moreover, the fear of initial revenue loss hasalso subsided for the time being.