Goods and Services Tax (GST) revenue fell to Rs 83,346 cr in the month of October to reach its lowest level on record. The Ministry of Finance blames several factors on the dip in revenue, including taxes on most commodities. Revenue for September was Rs 92,150.
October’s revenue is accurate as of November 27.
Data available shows GST registration numbers swelled to 95.9 lakh taxpayers to date. Filings for October reached 50.1 lakh through November 26. Postponements have led to the government suggesting that tax compliance may not yet be up to standards.
The indirect tax system was implemented on July 1 with key features being delayed, including: reverse charges, e-way bills and invoice matching.
States have collected revenue of Rs 87,238 cr between the months of July and October.
State and General GST figures for October have yet to be released. Earlier in the month, GST cuts on 178 items were reduced from 28% to 18%. The rate reductions are expected to cause collections to fall further in the coming months. The major rate cuts occurred on November 15 and are expected to have an immediate impact on revenue.
Tax experts suggest that the GST Council reduced rates without caution. Experts suggest that further rate cuts will be under great scrutiny before they’re implemented.
A report suggests that GST collections have remained under target for the first four months since the new tax was implemented. The situation is unlikely to improve in the near-term, according to the report.
The report doesn’t take into account collections from petroleum products, which have seen an uptick in revenue as crude oil prices increase. OPEC and other major oil supplies have cut production rates to help offset an oil supply glut that caused crude prices to fall.
An uptick in US production has caused concerns that crude prices may dip again, causing collections from petroleum to suffer.
“Both collection as well as compliance of GST remains low, with the compliance being at around 50 per cent and is unlikely to increase significantly till the complete framework including returns matching, e-way bill, and reverse charges, are implemented fully,” says Kotak Securities.
GST compliance also requires some 1.5 million dealers that are required to file quarterly.
“Because of the first time requirement of paying IGST on transfer of goods from one state to another state even within the same company, there was an additional cash flow of IGST in the first three months,” the report noted.
Earlier in the month, the Union Cabinet approved a National Anti-Profiteering Authority (NAA) formation. The NAA would ensure that the lower taxes under the tax regime are passed through to consumers.
The NAA will ask those profiting most from the recent tax benefits to pass through on to consumers. In cases where the consumer is not able to be identified, companies would then deposit the savings amount into the Consumer Welfare Fund. A penalty can be imposed on non-compliant entities. NAA officials will also have the authority to cancel GST registration in the most severe cases.