GST collections crossed the Rs 1 lakh crore-mark for the fifth month in a row in February, rising 7 per cent annually to over Rs 1.13 lakh crore, indicating economic recovery, the finance ministry said on Monday. Goods and Services Tax (GST) collections had risen for two straight months to touch record Rs 1,19,875 crore in January and Rs 1.15 lakh crore in December. The gross GST revenue collected February 2021 is Rs 1,13,143 crore, of which Central GST is Rs 21,092 crore, State GST is Rs 27,273 crore, Integrated GST is Rs 55,253 crore (including Rs 24,382 crore collected on import of goods) and Cess is Rs 9,525 crore (including Rs 660 crore collected on import of goods). GST revenue in February last year was Rs 1.05 lakh crore.
“In line with the trend of recovery in the GST revenues over past five months, the revenues for the month of February 2021 are 7 per cent higher than the GST revenues in the same month last year. “During the month, revenues from import of goods were 15 per cent higher and the revenues from the domestic transaction (including import of services) are 5 per cent higher than the revenues from these sources during the same month last year,” the ministry said in a statement.
GST revenues surpassed Rs 1 lakh crore-mark fifth time in a row and crossed Rs 1.1 lakh crore for the third consecutive month post-pandemic. This is a clear indication of the economic recovery and the impact of various measures taken by tax administration to improve compliance, the ministry said.
GST collections, which directly reflect the state of economic activity, had plummeted to a record low of Rs 32,172 crore in April 2020, after the government imposed a nationwide lockdown to curb the spread of coronavirus. Meanwhile, the finance ministry has released Rs 1.04 lakh crore GST compensation to states since October to meet the shortfall in revenue.
The lockdown, categorised by several agencies as one of the strictest in the world, pummelled the economy as demand dried up and non-essential businesses were shuttered. In the April-June quarter, the economy contracted by the steepest ever 24.4 per cent, and 7.3 per cent in the September quarter. However, in October-December it came back in positive territory with 0.4 per cent growth. As restrictions were gradually lifted, many parts of the economy were able to spring back into action, although output remains well below the pre-pandemic levels.
Icra Principal Economist Aditi Nayar said while the growth of GST collections eased mildly in February 2021, it remained healthy, in line with the consolidation in the momentum of economic activity observed across a variety of lead indicators. Subsequently, a favourable base effect is likely to result in the CGST collections expanding by 18-23 per cent in March 2021.
Deloitte India Senior Director M S Mani said, “In addition to the stabilisation of economic activities, the continuing trend of high GST collections for the past few months is also on account of the data analytics approach adopted by the authorities, which has led to significant detection of evasion and incorrect ITC availment. With the gradual opening up of the services sectors, economic activity is expected to pick up, leading to improved collections in the next month as well”.
Shardul Amarchand Mangaldas & Co Partner Rajat Bose said the various measures taken by the government to ensure compliance also seems to be paying off. “Hopefully, the worst is over and this should definitely bring a cheer to the government which desperately needs the fiscal resources to implement its policy commitments.”
PwC India Partner & Leader, Indirect Tax, Pratik Jain said: “It is expected that the trend of increasing GST collection would continue as we approach the financial year-end and audits become more rigorous. This should give much-needed confidence to the government to consider rate rationalisation”.