Revenue collections under the Goods and Services Tax (GST) for October slid to ₹83,346 crore, from more than ₹92,000 crore in September, according to official figures released by the government on Monday.
“95.9 lakh taxpayers have been registered under GST so far, of which 15.1 lakh are composition dealers who are required to file returns every quarter,” the government said in a release. “50.1 lakh returns have been filed for the month of October till 26th November 2017.”
The Centre said several factors contributed to the drop including additional Integrated GST (IGST) collections in July, August, and September, the reduction in tax rates on some items, as well as lower compliance.
“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,” it said. “As and when the final transaction of these goods takes place, the credit for IGST is being utilised for payment of SGST and CGST and therefore, the inflow of new taxes is low… Since the overall incidence of taxes on most commodities have come down under GST, it would naturally have some implication” on revenues, it added.
With more wide-ranging rate reductions having been effected in November, collections may dip further in the coming months.
“The major rate reductions which have happened from November 15 would be considered in next month’s data,” M.S. Mani, partner, GST, Deloitte India, said.
The Centre also said tax compliance “may not be up to the mark” as implementation of key steps like matching of returns, e-waybills and reverse charge mechanism had been postponed.
“Though the total number of tax payers registered under GST has gone up to 95 lakh, the GST revenue collection in November has shown a significant dip as compared to previous months,” Abhishek Jain, Tax Partner at EY India, wrote in a note. “Moreover, revenues may be further impacted as the pending export related refunds in the range of about ₹50,000 crore are disbursed by the Government.”
Looking ahead, tax experts feel that the GST Council will now be extremely cautious about further rate reductions.