Reinforcing the economic recovery trend, goods and services tax collection surpassed the Rs 1-trillion mark for the second consecutive month in November, according to the official data. Although slightly lower than the previous month, the robust mop-up could be attributed to the festival season demand, experts said, cautioning that this might not be sustainable in the coming months.
GST collection stood at Rs 1.049 trillion in November, as against Rs 1.051 trillion in October, the data released by the finance ministry on Tuesday showed. This is also the third straight month when GST collection rose year-on-year (YoY), indicating the reinstatement of normalcy in economic activity after months of disruption caused by the Covid-19 lockdown.
The November collection was 1.42 per cent higher than that in the same month a year ago, down from 10.25 per cent YoY growth in October and 3.87 per cent in September. These collections mostly account for transactions done in October, and hence represent the impact of the festival season. The lower e-way bill generation in November, at 55.3 million compared to 64.1 million in October, suggests that the December GST mop-up may be lower.
“The trends regarding the sustainability of demand will be clearer in the data on GST collection for December, which will be for the transactions that took place in the month of November,” said Aditi Nayar, principal economist, ICRA Ratings. Nayar said the sharp moderation in growth in the generation of GST e-way bills in November signalled the impact of the change in working days related to the shift in the festive calendar. “Nevertheless, the average growth of GST e-way bills in October-November 2020 surpassed that for the month of September 2020, which is encouraging,” she added.
Monthly GST collection had crossed Rs 1-trillion mark seven times in the last fiscal year.
Central GST collection was slightly less at Rs 41,482 crore in November compared to Rs 44,285 crore in October, while state GST mop-up was Rs 41,826 crore as against Rs 44,839 crore in the previous month. Compensation cess collection improved significantly in November to the highest level this fiscal at Rs 8,011 crore, posting 12.3 per cent growth YoY.
The total number of GSTR-3B returns filed for November was 8.2 million compared to 8 million filed in October.
The government had in October introduced the e-invoicing mechanism for firms with a turnover of Rs 500 crore and above. An anti-evasion measure, e-invoicing will be extended to entities with a turnover of Rs 100 crore and above from April 1 next year.
Pratik Jain, partner, PwC India, said the other encouraging aspect was a gradual increase in the number of GST returns. This, he said, indicated that the overall compliance level was improving with increased use of technology and initiatives such as e-invoicing by the government.
During the month, revenues from import of goods posted 4.9 per cent growth, while that from domestic transactions (including import of services) grew by 0.5 per cent YoY.
Abhishek Jain, partner at EY, said, “The second straight month of Rs 1-trillion-plus collection is certainly indicative of continued economic recovery and the collections being slightly more than the same month last year is quite encouraging. This should also help in containing the shortfall of GST collections caused due to the pandemic.”
About nine states and Union Territories posted double-digit expansion in collection on account of domestic transactions in November. Some others, including Chandigarh, Delhi, Bihar, and Goa, saw a YoY decline exceeding 10 per cent. “Other territory which includes ships, rigs etc. has performed poorly as it shows a decline of close to 50 per cent compared with the same period of the previous year,” said Rajat Mohan, partner, AMRG Associates, who added that the overall GST data showed that the Indian economy was recovering from the instability caused by the pandemic.