GST revenues likely to drop in August

GST revenues likely to drop in August

Government Tax - GST Announcement - Illustration as EPS 10 File

The Goods and Services Tax (GST) revenues may take a hit by a few thousand crore rupees in August due to a rate cut of nearly 100 goods last month.

The items on which tax rates had been slashed in the July GST Council meeting included washing machine, mixer grinder, fridge, paints, varnishes and sanitary napkins.

The government has been garnering an average of Rs 90,000 crore every month as GST revenues since July last year when the new indirect tax was implemented. In April this year, however, the GST revenues surpassed Rs 1 lakh crore. April came in at a highest of Rs 1.03 lakh crore.

A top finance ministry official told DH that the revenues may take a hit by a few thousand crore in August but will soon stabilise on improved compliance.

He also exuded confidence that the festive season of Dussehra and Diwali will generate more demand and result in more collection.

“Revenue maximisation is not the only aim of the newly introduced GST, which has subsumed 17 local taxes. The rate cut on hundreds of items in the past many months has given relief to the common man,” the official said.

He said, on the contrary, the government was expecting better revenue collection in coming days due to revenue buoyancy.

Apart from cutting rates, the GST Council in its July 27 meeting also made compliance easy for small taxpayers. It allowed businesses with the turnover of up to Rs 5 crore to file tax returns quarterly. Earlier, this limit was Rs 1.5 crore.

The revenue collections in August are expected to be out by September 1.