Fall in Goods and Services Tax (GST) Collections

• 02 Apr 2020

Why in News

Goods and Services Tax (GST) collections for March 2020 stood at ₹97,597 crore, dropping below the ₹1 lakh-crore mark after four months.

Key Points

• GST Collected
  
  • Of the total collections, central GST stood at ₹19,183 crore, State GST was at ₹25,601 crore and integrated GST atwas ₹44,508 crore.
  • The government had settled ₹19,718 crore to CGST and ₹14,915 crore to SGST from IGST as regular settlement.
  • In addition, the Centre also apportioned unsettled balance IGST of ₹6,000 crore on an ad-hoc basis in a 50:50 ratio between the Centre and States.
• Partial Impact of COVID-19:
  
  • The March revenue collections are based on the business conducted in February.
  • The collections do not take into account the full impact of COVID-19 and the consequent shutdown of many business sectors in India.
  • It has been warned that the revenues for the month of April 2020 are likely to dip much further.
• In Comparison to March 2019
  
  • According to the Ministry of Finance, Gross GST revenue for March 2020 was 8% lower than that of March 2019.
• Fall in Collection from Imports
  
  • Although GST revenue from domestic transactions dropped 4% in comparison with March 2019, there was a 23% fall in the tax collected on import of goods.
  • Global trade was affected by COVID-19 in February itself.
• Step Taken
  
  • Small businesses have been allowed a three-month deferment of GST payments due to the COVID-19 situation.
  • There is a wider industry demand for a moratorium on payments and reduction in rates.

Goods and Services Tax

• GST is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
• GST is a comprehensive Indirect Tax which has replaced many Indirect Taxes in India.
• The Goods and Service Tax Act was passed in the Parliament on 29^th March 2017 and came into effect on 1^st July 2017
• Under the GST council and 101^st constitutional amendment, the tax is levied at every point of sale.
• GST is categorized into CGST, SGST or IGST depending on whether the transaction is Intra-State or Inter-State.

Central Goods and Services Tax and State Goods and Services Tax

• CGST is a tax levied on Intra State supplies of both goods and services by the Central Government and is governed by the CGST Act. SGST is also be levied on the same Intra State supply but will be governed by the State Government.
• This implies that both the Central and the State governments agree on combining their levies with an appropriate proportion for revenue sharing between them.
• However, it is clearly mentioned in Section 8 of the GST Act that the taxes be levied on all Intra-State supplies of goods and/or services but the rate of tax shall not be exceeding 14%, each.

Integrated Goods and Services Tax

• IGST is a tax levied on all Inter-State supplies of goods and/or services and is governed by the IGST Act.
• IGST is applicable on any supply of goods and/or services in both cases of import into India and export from India.

Source: TH