The declining revenues are unlikely to result in any rate cuts in the near future. The declining revenues are unlikely to result in any rate cuts in the near future.

Amid already prevailing concerns over tax evasion and dip in revenue collections, goods and services tax (GST) collections for November slipped further to Rs 80,808 crore (as on December 25), the lowest since the July 1 implementation of the new indirect tax regime. The impact of GST rate cut on over 200 items that became effective from November 15 was reflected in the month’s collections, which are about 14 per cent lower than the collection of Rs 94,063 crore recorded for July (as on August 31) and about 11 per cent lower than the projected target of Rs 91,000 crore.

The government had garnered Rs 83,346 crore as total GST revenue for October (as on November 27), Rs 92,150 crore for September (as on October 23), Rs 90,669 crore for August (as on September 26) and Rs 94,063 crore for July (as on August 31).

In August, finance minister Arun Jaitley at the time of revealing the first set of GST revenue figures for July had said that based on back-of-the-envelope calculation linked to the targets in the 2017-18 Budget, the central government’s monthly tax revenue should be Rs 48,000 crore and that of states at Rs 43,000 crore, taking the combined target of the two to Rs 91,000 crore.

For November, out of the total GST collections of Rs 80,808 crore, Rs 13,089 crore has been collected as Central GST (CGST), Rs 18,650 crore has been collected as State GST (SGST), Rs 41,270 crore has been collected as Integrated GST (IGST) and Rs 7,798 crore has been collected as compensation cess. Even after taking into account the settlement of fund owing to cross-utilisation of IGST against CGST, the total CGST revenue for November stands at Rs 23,437 crore, about Rs 24,500 crore lower than its projected target of monthly revenue of Rs 48,000 crore. Total SGST revenue for November was recorded at Rs 33,138 crore, a gap of over Rs 9,800 crore from the monthly target of Rs 43,000 crore.

“Rs 10,348 crore is being transferred from IGST to CGST account and Rs 14,488 crore is being transferred from IGST to SGST account by way of settlement of funds on account of cross-utilisation of IGST credit for payment of CGST and SGST respectively or due to inter-state B2C transactions. Thus, a total amount of Rs 24,836 crore is being transferred from IGST to CGST/SGST account by way of settlement,” a finance ministry release said.

The declining revenues are unlikely to result in any rate cuts in the near future. As it is, the rate cut on over 200 items along with reduction in the tax rate for all restaurants, barring those in luxury hotels, to 5 per cent (without any input tax credit) is expected to cost the exchequer around Rs 20,000 crore, an official said.

Tax experts said the decline in revenues was also expected on account of utilisation of input tax credit and high IGST against SGST and CGST and the uncertainty may prevail for December due to transitional credit claims. Pratik Jain, Leader-Indirect Tax, PwC said, “Even for December, there could be an impact of opening credit claim for which the last date is December 27. From January onwards, the collections should stablise.”

Abhishek A Rastogi, Partner, Khaitan & Co said, “There are reasons for this. First, the reduction of rate and second, utilisation of credits. The right number will be reflected in the last quarter of 2017-18 or may be the first quarter of the next financial year.”

Some tax experts said that the declining revenues reflect lower compliance, which was expected to improve otherwise with lower GST rates. MS Mani, senior director, Deloitte India said, “While there was an expectation of lower collections in November due to the rate reductions from November 15, it was expected that higher compliance would offset the same, which does not appear to have happened. The lower collections in November depict a trend where the collections seem to be declining every month since July. While the decline on account of rate reductions is understandable, the fact that there is a decline in compliance would be a matter of concern.”

After the decline in October GST revenues, states and Centre had raised concerns over tax evasion and non-compliance, following which the GST Council in a meeting on December 16 had decided to approve an early implementation of the e-way bill system. The Council has approved February 1, 2018 as the date for mandatory rollout of e-way bill system for inter-state movement of goods across the country and June 1 as the date for both inter-state and intra-state movement of goods.

Next GST Council meeting on January 18

New Delhi: As the presentation of Budgets kickstart for both Centre and states in a month, the Goods and Services Tax (GST) Council has decided to hold its next meeting on January 18 to discuss the revenue collection so far and its impact on Union Budget and respective state Budgets, officials said.

This would be the 25th meeting of the GST Council, which is headed by Finance Minister Arun Jaitley and has representatives of 31 states/UTs. Officials said no detailed agenda has been decided so far but the focus is likely to be on the impact of GST on Union Budget and budget of states. “The discussions would be in relation to the GST’s impact on finances of both central and state governments. Revenue collected so far and the issues relating to IGST utilisation against CGST/SGST are going to be taken up in the Council meeting,” an official said.

The Council had last met via videoconferencing on December 16 in a hurriedly called meeting, wherein it had approved an early date of February 1 for the mandatory rollout of e-way bill system for inter-state movement of goods across the country and June 1 as the date for both inter-state and intra-state movement of goods as it was felt that tax evasion is resulting in lower GST revenues. ENS

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