According to a recent report, the government has managed to collect slightly above Rs 1 lakh in Goods and Services Tax (GST), Rs 1,00,289 to be exact, revenue in the month of May 2019. While this is an improvement from the same month previous year, the collection is below the target. Also, there has been reported a drop of nearly Rs 13,000 crore from the previous month, i.e. April 2019, during which the total GST collection was Rs 1,13,865 crore.
As per the target set by the Centre and states, the monthly collection should be minimum Rs 1.14 lakh crore if the Centre wants to avoid paying compensation to revenue losing states.
Owing to the decrease in tax collection, it is highly unlikely that we will observe any further reduction in GST rates in the coming months, especially when the tax experts are positively blaming the past tax rate cuts for this dip in the collection. The government would also know start focusing more on compensating the revenue loss of states rather than providing more relaxation to the taxpayers. So, unless revenue collection sees an unpredictable growth in the coming years, the likelihood of any more cuts in tax rates is almost nil.
It is also possible that tax authorities will now pay more attention to increasing tax compliance as they will start analysing the revenue data collected from various sources. The 2-year transition period set by the government for GST to stabilise is going to end this June.
Despite an increase in the overall GST return filing, the tax collected by the government in May 2019 is surprisingly lower than the last month’s collection, points out Vishal Raheja, DGM, Taxmann. However, since April 2019 collections also included the additional taxes for the difference found through FY19 annual reconciliation, so, it may be possible that the revenue collection this month has actually increased.
