Reversing a slowdown, revenue collections from the Goods & Services Tax (GST) in India rebounded in December with a growth of 7.3% and bringing relief for policymakers ahead of the 2018-19 budget. “The total revenue received under GST for December 2017 has been £8.67 billion,” the finance ministry said in a statement. The reversal in the slowing trend comes amid the series of steps taken by the government to stabilise the new tax reform measure and plug evasion. December collection is also likely to help reduce some of the uncertainty over revenue receipts in the current financial year.
Declining trend in GST collections started in October, slowing to £8.33 billion from September’s £ 9.21 billion. It slowed for the second consecutive month in November to £8.08 billion, triggering some concerns about revenue receipts.
The number of taxpayers registered under GST topped 1 million up to January 24, of which 17,10,000 are composition dealers, which are required to file returns every quarter. The finance ministry said 56,30,000 GSTR 3B returns have been filed for December.
The government expects GST collections to rise by 20-25% after the introduction of electronic way (e-way) bills, which will track the movement of trucks and help check revenue leakage. Tax experts said the December numbers showed that the system was stabilizing. “Increase in revenue collection is on expected lines and means that gradually GST is stabilizing and impact of transition issues is waning out. This, coupled with few anti-evasion measures being taken by government, is likely to result in further increase of revenues in January-to-March quarter,” said Pratik Jain, indirect tax leader at consulting firm PwC.
However, some economists said the extent of increase may not be enough to halt a shortfall in indirect tax revenues. “It is encouraging that sequentially there is an improvement in collections but the magnitude of improvement may not be big enough to eliminate concerns about a shortfall in indirect tax revenue collections this year,” said Aditi Nayar, principal economist at ratings agency ICRA.
