GST (the Goods and services tax) was introduced about two years ago. In August, last month, this tax that subsumed most of the indirect taxes witnessed a drop to Rs 98,202 crore from Rs 1.02 lakh crore in the previous month as per the information from the Finance ministry. It is another sign of a slowdown wracking the economy.
Nevertheless, total Goods and Services Tax (GST) mop-up for August this year was 4.5 per cent higher than the Rs 93,960 crore secured in the same month last year.
This is the second time during the year that GST dropped below Rs 1 lakh crore mark. The first time it happened in June when the collection was Rs 99,939 crore.
However, the Central GST collections stood at Rs 17,733 crore, while State GST Rs 24,239 crore, and Integrated GST Rs 48,958 crore (including Rs 24,818 crore collected on imports) during August this year.
Furthermore, it is stated that the cess collection stood at Rs 7,273 crore (including Rs 841 crore collected on imports).
The number of GSTR 3B Returns (summary of self-assessed return) filed for July up to end-August totalled 75.80 lakh.
As per the report, Rs 27,955 crore has been released to states as GST compensation for June-July 2019.
Why did GST Drop?
Many experts have come up with various points of views for a reason behind the drop. The tax experts have commented on the situation by saying that the decline is due to seasonality factors. Moreover, currently, various sectors, including automobile and FMCG, are going through the worst phase due to subdued consumption. All these factors may be considered as a reflection of an economic slowdown.
The ministry explained that the main factor behind the drop was the probable postponement of the sale of items. The GST Council reduced the tax on the sale of some items on July 21 in their meeting, but the rate cut came into force from July 27. Hence the consumers would have postponed buying those items expecting a further reduction in price.
Abhishek Jain, the tax partner at a consulting firm EY, said that the slight dip in the revenue below one lakh crore might be linked to the general slowdown in the industry. He also mentioned another factor by emphasising the same point of rate cut agenda in GST council meeting.
The Expectations for better continues
Experts are expecting the figure to pick up from October because of the festive season. As India is a land of festivals and people spend during that time the most. So a rise in the sale of goods is expected. Now it has to be seen how the October-December period pans out.