New Delhi: Goods and Services Tax (GST) collections crossed the ₹1 trillion mark for the second consecutive month in December, bringing some relief to policymakers fighting to boost consumption and liquidity in a slowing economy.
Central and state governments together collected ₹1.03 trillion in December, 9% more than what was mopped up in the same month a year ago.
“The GST revenues during the month of December, 2019 from domestic transactions have shown an impressive growth of 16% over the revenue during the month of December, 2018. If we consider IGST collected from imports, the total revenue during December, 2019 has increased by 9% in comparison to the revenue during December, 2018. During this month, the IGST on import of goods has seen a negative growth of (-) 10%, but is an improvement over (-) 13% last month and (-) 20% in the month of October,” a finance ministry statement said.
Till end-December, about 8.1 million summary tax returns were filed, said the statement.
Declining GST receipts in the past few months had led to tension in Centre-state relations as some states publicly aired their grievances about a delay in payment of GST compensation from the central government.
Tax cuts and exemptions granted in several rounds since the rollout of GST have made it revenue-deficient rather than revenue-neutral, as was originally planned. Tax cuts on consumer goods have also led to a situation where businesses are paying more taxes on raw materials than on finished products and subsequently claiming the excess paid as refunds.
At the GST Council’s meeting on 18 December, officials made a presentation on revenue trends and suggestions on restructuring tax rates and slabs, but the Council decided against taking it up due to the economic slowdown. States were not keen on the proposal as it would lead to a rate increase on items in lower slabs, which could impact the common man.
The Council had concluded in its last meeting that raising the rate of cess on items in the highest slab of 28% will not be sufficient to raise revenue to meet the shortfall.
Finance ministers of central and state governments are likely to discuss restructuring GST slabs and rates as well as ways to handle a revenue shortfall and the GST compensation to states in the year starting 1 April after the Union Budget is presented on 1 February, Mint reported on 30 December.