The Central Goods and Services Tax (GST) collections are way behind the budgeted estimates for the first nine months of the current financial year. The government has been able to collect only Rs 1.47 lakh crore during the nine months of the fiscal, which is 24.4% of the budget estimates.
Frequent tweaking of GST rates during the current fiscal and lower compliance among the traders have contributed to the low level of CGST collections. The government had estimated the CGST mop up at Rs 6.04 lakh crore in the Budget for 2018-19.
CGST, which goes directly to the kitty of the Central government, is a tax levied on intra-state supplies of both goods and services by the Government and will be governed by the CGST Act.
If calculated on the basis of monthly estimates, the Centre was supposed to collect Rs 50,325 crore in CGST every month but has collected only an average of Rs 16,300 crore.
According to analysts tracking the sector, it’s mostly because of the recent spate of rate-cuts announced by the government that has led to the shortfall in the GST revenue. “First there is a shortfall in the GST collection on the back of recent rate cuts. Also, there might be evasions still taking place, contrary to the claims of the government,” an economist with Care Ratings told DH.
In fact, out of over 1 crore registered taxpayers under the GST regime, only 72.44 lakh filed the GSTR-3B returns for the month of November up to December 31, 2018.
However, the centre might set-off a part of its losses on CGST collection from the appropriations in the IGST, which is shared between the states and the Centre.
Normally, sharing of revenue between the Centre and the states is governed by the Finance Commission recommendations. With regards to GST, the amount collected in the name of SGST would go to the state governments and the amount collected in the name of CGST will go to Central government.
The taxes collected in the name of IGST would be split in an equal ratio between the Centre and the states. The IGST collection, for which the centre had accounted its share at Rs 50,000 crore in the budget, stands at Rs 4.5 lakh crore.
According to numbers available with the Comptroller and Auditor General (GAG) and Finance Ministry, the centre's share in the IGST is pegged at Rs 2 lakh crore. However, even after adding the share of the centre's share of IGST, the centre has collected only 53% of its GST targets for the year.
Analysts across the spectrum predict a shortfall of at least Rs 90,000 crore, after centre sets off the IGST component and cess fully.
So far this year, as against a collection target of Rs 90,000 crore, the Centre has distributed Rs 30,751 crore (till September), as compensation.
On the other hand, SGCT collection stands at Rs 2.02 lakh crore for the year.
As a result of lesser tax collection, the country is expected to see fiscal slippages for the second consecutive year in 2018-19. Most analysts, including Care Ratings and Motilal Oswal, predict the fiscal deficit at 3.5% of GDP, a slippage of 20 basis points over the Budget target.