GST Collections Hit Lowest Mark Till Date; 3 Financial Side-Effects Which Can Occur Now!
Due to low GST collections, there are three side-effects which can occur now, as people are simply not paying tax.
Goods and Services Tax or GST collection in India has reached the lowest point till date. This is an alarming news, and Govt. officials are right now huddling together, to seek out ways to stop this race to the bottom.
Although there is an important factor which led to lowest GST collections last month, there are three side-effects which can occur now, as people are simply not paying tax.
What will the Govt. do now?
GST Collections Hit Rock Bottom!
For the month of November, only Rs 80,808 crores were collected under GST filing, which is the lowest amount to date.
For the month of July, when GST was implemented, the collections stood at Rs 94,063 crores, which is highest to date.
After that, the collections gradually decreased, and here are the numbers:
- July: Rs. 94,063 crores
- August: Rs. 90,669 crores
- September: Rs. 92,150 crores
- October: Rs. 83,346 crores
- November: Rs. 80,808 crores
Out of Rs 80,808 crores collected in the month of November, here is the breakdown:
- Rs. 41,270 crore: Integrated GST
- Rs. 18,650 crore: State GST
- Rs. 13,089 crore: Central GST
- Rs. 7,798 crore: Compensation cess collection for the states
As per official records, as of December 25th, there were 9.9 million taxpayers registered under GST; and 5.31 million returns have been filed till December 25th.
Reason For This Massive Dip?
As per tax experts, this massive dip in the month of November and December has been mainly observed for removing around 178 daily use items from the top slab of 28% last month.
Besides, GST on restaurants has been capped at 5%, which can be another reason for slow collections.
Pratik Jain, leader, indirect tax, PwC said,
“Dip in collection in revenue for November is on expected lines, as rates of over 175 items were reduced from November 15 and refunds to exporters started recently,”
He expressed confidence that GST collections will stabilize from January onwards.
3 Side-Effects Of Slow GST Collections
As per speculation, there can be three major side-effects of this slow GST collection in November, and maybe December:
- Govt.’s Budget calculations can go haywire, as fiscal projections will not be met, and tax predictions will go erratic. This means Govt. won’t be able to announce or launch new infra-development schemes, and the nation’s progress may slow down, albeit temporarily.
- GST Council had announced earlier that further rationalization of GST rates can happen, but with slow collections, this decision can be deferred, and some products which could have been cheaper, will continue to be taxed extra. If GST collections were as per the expectations, then GST Council could have announced further lowering of tax rates.
- And finally, the pressure on non-taxpayers will now intensify, as Tax Officials will now go full throttle to discover and force them to pay taxes. We had already reported that only 1.7% of Indians are right now paying income tax, and this can be a warning bell for those who are avoiding taxes.
We will keep you updated as we receive more news regarding GST and tax collections.