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On Wednesday, the Centre opened a new chapter in India’s Goods and Services Tax (GST) history, making public for the first time since GST’s launch in July 2017— the State-wise gross domestic GST collections.
This move, albeit for the single month of December 2019 and its comparable in December 2018, will also go a long way in improving the “transparency” quotient of the GST system. It should also be seen as the Centre’s way of setting the record straight that States are in fact earning revenues and that some States’ anxiety in recent times over their lacklustre GST collection and delayed compensation cess payout may not have been a little exaggerated.
There was lot of debate recently with several State Finance Ministers stating that they are not getting GST compensation in time and they are being deprived of revenues.
Of course, one can’t come to full blown conclusions about GST revenue growth based on one month’s State-wise data.
Future course
But, in the interest of transparency, this system of making public the State-wise domestic GST collections data has to be continued in future.
It is hoped that the Centre would in the coming days make this state-wise Gross domestic GST collection disclosure a permanent feature in the monthly GST announcement calendar.
The data showed a 16 per cent year-on-year increase in State-wise gross domestic GST collections in December 2019 at ₹80,849 crore, indicating that the Indian economy is not doing as badly as is being made out. But, this has come after a few rounds of GST rate reductions in several items during the year 2019. Had those rate cuts not happened, the overall revenue buoyancy picture may have even been a better story, say tax experts.
GST is a barometer on how businesses are doing in the country.
There is very little time lag given that any sale or provision of services that happens in a month, the relevant GST has to be paid by the 20th of next month.
While festive season of November could have helped boost GST collections in December 2019, one has to keep in mind that festive season was also there in the same month in December 2018.
Marking stability
MS Mani, Partner, Deloitte India said: “... except for the months of September and October 2019, the GST collections in every month of 2019-20 has been higher than that in 2018-19. The State-wise collections for December 2019 are also higher by 10 per cent to 22 per cent for the major States compared to December 2018. These statistics appear to indicate that the revenues of the Centre and the States from GST have begun to stabilise and show an upward movement”.
It is now necessary to ensure that frequent rate and procedural changes in GST are avoided or kept minimal so that businesses are not required to constantly keep changing their processes and re- evaluating their supply chain and pricing, he said.
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