GST COLLECTIONS – DECLINING TREND

[Dr. Sanjiv Agarwal]

It is a hard fact that GST revenue collections have off late shown a falling trend as is clearly evidenced from the official data released by Government itself:

                                                                                                                             (Rs. in crore)

Month	2019	2018	2017
October	95380	100710	93333
September	91916	94442	94067
August	98202	93960	95633

The possible reasons for this decline may be many and arguable but one thing is certain- there is a visible slow down in economy, otherwise YoY figures will not very much. While cyclical factors are not ruled out, the declining trend talks of slowdown in economy in manufacturing and service sectors, i.e., from where GST mainly comes from. Decline in demand and consumption of goods and services leading to stress on production capacities (automobile is just one example), unemployment coupled with non-commensurate increments in salaries, of course owing to economic slowdown, fall in disposable incomes and so on…….. the reasons could be added.

One needs to look at the decline in tax revenue in right perspective and we can not draw a conclusion that despite festive season, tax collection is down. No, that explanation may prove be wrong. The tax collection for October, 2019 will get reflected in November, 2019 when tax for October is payable . Moreover, input tax credit is being taken by assessees (we can assume that it is genuinely availed) and rate of GST has been reduced on many goods and services in past 6 months owing to trade demands and political compulsions.

Going forward, India needs to tighten the loose ends in GST administration and frame a policy for GST rates rationalization. It should also have lower tax rates on expanded base for taxation and gradually reduce exemptions. Bringing in real estate, electricity and some petroleum products may also be revisited.

Undoubtedly, GST is the tax of future but how to shape this future is in our hands only.