The assumed reduction in GST rates on products like refrigerators, cement and air conditioners may get a hold because revenue collection in February is lower than the other previous months’ tax collections, aid PwC’s Partner and Leader Prateek Jain.
During an interview, Jain said, “We were expecting that a lot of the items which are under 28 percent [slab] right now will also be brought down to 18 percent…I don’t think that will happen anytime soon because the government wants to stabilise collection. Even structural changes such as petroleum products coming under GST. Those kinds of decision, the government will not be willing to take right now.”
The government was unaware of the revenue impact they will face after reduced Goods and Services Tax rates, as the tax collection revenue of India from new sales tax is showing downfall.
Jaid mentioned, “When the rate cuts happened in mid-November, the impact that the government said on our fiscal would be Rs 20,000 crore. Maybe they want to review that because really, the collections are going down.” The government diminished the GST bracket concerning a number of products from existing 28% to 18% in November.
In December, the collection stands at Rs 88,929 crore, in January, it is Rs 86,318 crore, whereas, in February, it falls to Rs 85,174 crore. Jain mentions that it is lower than Rs 1.1 lakh crore in a month, which the government expected. As per the professionals, the number will increase after GST E-way bill implementation. So, the government will focus on E-way bill rollout.
But, PwC denies the same. He said, “Many states have had such systems before and I haven’t seen any empirical evidence to support that e-way bills will make a difference.”
A report by Neelkanth Mishra, India economist and strategist at Credit Suisse says, “The headline number of Rs 852 billion (Rs 85,174 crore) appears a bit disappointing, but given 10 percent fewer days, the run-rate is an improvement. We expect this improvement to continue as the year progresses, given healthy nominal revenue growth in key sectors.”
Important Consideration from Mishra’s Note:
- February collection made a total collection of Rs. 4.6 lakh crore in FY18 than the Rs 4.44 lakh crore in the revised FY18.
- There is a gap in Central GST collection for being below target and unallocated Integrated GST for being much above. This will continue in FY19.
- January 2018 GST collection was first informed to stand at Rs 86,300 crore and now touches Rs 88,900 crore sustaining the trend in a month although being higher than first reported.
- The number of filing is higher as compared to July month and the entity numbers of GST filing are increasing continuously.
Filing data also suggests that there is more filing in February month when compared with the previous months. During these nine months, the compliance rate stands at 69 percent.
