Explained: Record High Rs 1.4 Lakh Crore GST Collection In April 2021 And What It Means For Economic Recovery
The GST revenue collected in the month of April 2021 reached a record high of Rs 1,41,384 crore, highest since the introduction of GST.
The collections surpassed the previous highest collections of Rs 1.24 lakh crore in March by 14 per cent. The revenues from domestic transaction (including services import) in April are 21 per cent higher than that of the last month.
Last year, when national lockdown brought the economy to a grinding halt, the month of April saw the indirect collections had dipped to Rs 32,172 crore.
The collection for the past April stands as follows:
CGST at Rs 27,837 crore
SGST at Rs 35,621
IGST at Rs 68,481 crore
Cess at Rs 9,445 crore (including Rs 981 crore collected on import of goods)
From IGST, as regular settlement, Rs 29,185 crore has been settled to CGST and Rs 22,756 crore to SGST. According to the finance ministry, after regular and ad-hoc settlements, the total revenue of Centre and the States is Rs 57,022 crore for CGST and Rs 58,377 crore for the SGST for April 2021.
Reportedly, GST revenues have not only consistently crossed the Rs 1 lakh crore mark in the last seven months but have also shown a steady increase.
One of the reasons behind buoyant collections is the economic recovery.
Apart from this, the ministry notes that anti-evasion measures like closer monitoring against fake-billing, deep data analytics using data from multiple sources including GST, Income-tax and Customs IT systems also helped in boosting the collections.
It seems that several steps taken by the government for a more effective tax administration are also paying off.
Quarterly return and monthly payment scheme which enabled the small taxpayers to file only one return every three months; IT support to taxpayers in the form of pre-filled GSTR 2A and 3B returns; improved system capacity etc. have made the return filing process much easier.
Year-end audit and financial closure of the companies as on March could have also contributed to the increase in GST collection.
The GST collection data since last year points to a sustained economic recovery amidst a global COVID-19 pandemic. The Ministry of Finance said that the collection shows “remarkable resilience” of Indian businesses - which are not only complying with the return filing requirements but also paying their GST dues in a timely manner during the month even amidst the second wave of the COVID-19 pandemic.
Buoyant revenues also mean less fiscal deficit and more room for the government to take expansionist measures.
While lax social distancing, government not imposing lockdown and other COVID-19 measures are being blamed for the sudden surge in the cases, it did play a role in the economic recovery.
By the same token, lockdown measures being imposed currently can be expected to slowdown the economic activity and subsequent GST collections, especially since the states with high contribution to the GDP like Maharashtra, Madhya Pradesh, Punjab, etc. are witnessing high number of cases. The services sector – areas like hospitality, travel, and tourism – with strong backward linkages will also take a hit and the impact will be felt in smaller towns and villages.
Already, the MGNREGA data shows a spike in applicants - hinting at the return of migrant workers. In fact, at both the household as well as the individual level, the demand been the highest compared with any previous April in seven years, and 90 per cent higher than April 2020.
Anirban Nag, Bloomberg, analysing various indicators, noted that the economic activity in India picked up speed in March 2021, signalling it was well on the road to recovery before a new wave of coronavirus infections derailed progress.
A lot now depends on the pace and success of the vaccination programmes, COVID-19 restrictions, the recovery measures by the government after the second wave subsides, and agricultural performance (the monsoon is predicted to be bountiful this year).
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