GST Mop-up Dips in May, but 65% Higher on-year

India’s goods and services tax (GST) revenue in May amounted to Rs 1,02,709 crore as several states imposed curbs due to the second wave of the pandemic, down from April’s record Rs 1.41 lakh crore.

It was 65% higher than Rs 62,009 crore in the year earlier, when the lockdown was in place. May revenue exceeded Rs 1 lakh crore for the eighth month in a row. Some experts said the numbers were higher than expected and pointed to the economy getting back on track.

The finance ministry on Saturday said the figure for May included GST collections from domestic transactions until June 4. It expects collections to improve once the entire tax for the month comes in as some deadlines have been extended. “The actual revenues for the month of May 2021 thus would be higher and would be known when all the extended dates expire,” the ministry said in a statement.

Taxpayers with turnover above Rs 5 crore have been allowed to file returns by June 4, instead of May 20. Smaller taxpayers, with turnover below Rs 5 crore, have until the first week of July to file returns without late fees and interest. Experts said the moderation in revenue was on expected lines as e-way bills had seen a sequential decline in April and May from March.

E-way Bill Generation Falls to 58.7 million in April

E-way bills are required for the transport of goods more than Rs 50,000 in value and a key indicator of business activity. “With the extension and widening of restrictions by various states in May 2021, e-way bills have declined further, which will further dampen GST collections in June 2021,” said Aditi Nayar, principal economist at ratings agency ICRA.

E-way bill generation fell to 58.7 million in April and then to 38.2 million in May, the lowest in almost a year from a record 71.2 million in March.

Not So Harsh

The data signals that the effect of the curbs hasn’t been as harsh as estimated. “Collections above Rs 1 lakh crore pertaining to the transactions in April 2021 indicate that the economic impact of the lockdowns has been much lower than expected,” said MS Mani, Senior Director, Deloitte India.

The numbers for May will increase as smaller businesses file their returns in the extended period, said Rajat Bose, partner at Shardul Amarchand Mangaldas & Co. “Though most of the businesses were not functioning in April due to the lockdown, the numbers come as a pleasant surprise,” he said.

Mani urged a close watch on collections over the next few months to determine the extent of the impact of the pandemic on GST collections in FY22.

Of the gross GST revenue collected in May 2021, central GST (CGST) was Rs 17,592 crore, state GST (SGST) was Rs 22,653, integrated GST was Rs 53,199 crore (including Rs 26,002 crore on import of goods) and that from cess was Rs 9,265 crore (including Rs 868 crore collected on import of goods).

During the month, Rs 15,014 crore of CGST and Rs 11,653 crore of SGST were paid out from IGST as part of the regular settlement, the government said. Revenue from import of goods was 56% higher, while that from domestic transactions, including import of services, was 69% up from the year earlier, the ministry added.