Slowdown in three sectors, dip in imports hit GST collection
Auto sector, which has seen sales decline for 11 straight months, led the decline with Rs 3,500 crore, followed by cement (around Rs 1,500 crore) and steel (around (Rs 1,200 crore).
Collections in September fell 2.7% to a little under Rs 92,000 crore, the lowest since March 2018, and was way below the psychological comfort level of Rs 1 lakh crore. The three key sectors saw lower collections of Rs 6,200 crore, while several sectors such as electronics, consumer goods and tobacco have seen a healthy rise in GST payouts, officials told TOI. While goods contribute around 70% of the GST revenue, services account for the rest.
Auto sector, which has seen sales decline for 11 straight months, led the decline with Rs 3,500 crore, followed by cement (around Rs 1,500 crore) and steel (around (Rs 1,200 crore). Besides, collections from imports were down nearly 13%, impacting overall collections. Both imports and exports have remained weak in recent months as domestic economic activity stays muted.
The government has dismissed suggestions that there are flaws with the GST architecture, which was resulting in low collections. "Collections have been below Rs 1 lakh crore during the last two months. If there was a problem with the design, how would you explain the rise in initial two years?" an official said.
In Pune, finance minister Nirmala Sitharaman also cited floods in many parts of the country, including Maharashtra, Karnataka, Himachal, and Uttarakhand for the lower mop-up. She also said the revenue department has formed a committee to identify reasons for collection being lower than expectations.
Shoring up collections was a key theme during a meeting that principal secretary to PM PK Mishra and revenue secretary Ajay Bhushan Pandey had with state governments on Friday evening, where the revenue growth and weak compliance were two key themes, sources said.
"We have been asked to push (return) filing and better compliance," a state government said. The move comes at a time when several entities are slow in filing two GST returns - GSTR 1 and GSTR 3B - resulting in tax evasion. Sources said states were told that an Aadhaar-linked registration mechanism was being put in place to ensure that fly-by-night operators did not become part of the net, only to vanish after a few months after seeking refunds and tax credits, which had emerged as a major challenge for tax authorities. The Centre also suggested that there should be checks on refunds to ensure that bogus claims did not impact exchequer.