There is some good news in the GST front. In the final month of financial year 2018-19, GST collection was more for which the government has every reason to cheer. News for Indirect Taxes was of course not so encouraging and the targets were missed. The shortfall in indirect tax collection has however been compensated by increasing collection of goods and services tax.
According to government data,the GST inflow was Rupees 1,13,685 crores in April.That is the highest level of achievement since the new tax regime came into force in 2017.Percentile wise,these figures represent an increase of 10 percent compared to the same time a year ago.
As per consolidated figures,the GST collection was over a lakh crores in the quarter ending October and January as well.While the GST figures are encouraging, the government has acknowledged that economic growth has slowed down in FY 2018-19.The reasons cited for the slow-down is declining private consumption growth,a tepid increase in fixed investments and degreasing exports.The hope is now on GST numbers which hopefully will be the harbinger of better economic growth in FY 2019-20.
Another report says that the growth rate of Idian economy fell from 8.2 per cent in the second quarter to 6.6 per cent in the third quarter of last financial year. So any improvement in GST in the final quarter is definitely some good news.It needs no reiteration that an healthier GST collection will have less pressure on the centre to cover it’s fiscal deficit.
The increased GST collection in April has in fact surprised many experts.The reasons for such surprise is not far to seek.One,the lacklustre performance of the economy.Many sectors witnessed slow growth in recent months.This should normally have impacted the tax collections adversely.But that didn’t happen.
”The need is to cut down the time and energy required to file myriad forms.”
The interesting trend is that there is an increasing compliance among business.Particularly because of aggressive push by the tax authorities to widen the tax base.For example,GST filing was the highest in March this year.In April ,the surge has occurred despite a decrease in GSTR-3B returns filed by business.
In the absence of more dis-aggregated data,it could be argued that tax rate cuts by the GST council in December may have been another factor contributing to better tax collection during the last month.Enforcement action by the tax men to collect more revenue from registered tax payers who have not been filing returns could be yet another factor.It is too early to assume that this is the beginning of a happy trend.But GST collections are definitely better than the initial years.
Having said that,it must not be forgotten that there has to be further simplification of the GST regime once election results trickle in and a new government takes charge in Delhi.It may be mentioned that a significant number of business has been brought into the tax net since the advent of GST. In order to encourage greater compliance,there must be efforts to make it easier for small firms to remain in the tax net.The need is to cut down the time and energy required to file myriad forms.