NEW DELHI — According to official data released by the Ministry of Finance, collections of the Goods and Services Tax (GST) have dropped to a 19-month low of Rs 91,916 crore in September and this is the second straight month of a drop in GST collections due to economic slowdown in the country.
The tax collections at Rs 91,916 crore in September was lower than Rs 98,202 crore that had been collected in August and Rs 94,442 crore collected in the same month last year.
Despite approaching festive season, the country is witnessing a very low consumer demand triggering economic slowdown at an increased level. However, experts hoped for an upturn in October on the back of increased demand during the festival season.
India’s GDP slowed to more than a six-year low of 5 per cent in April-June, prompting the government to take an array of steps to boost the economy, including a steepest ever cut in corporate tax rate which would cost Rs 1.45 lakh crore.
The gross GST collections comprised of Rs 16,630 crore collections through Central-GST (CGST), Rs 22,598 crore in State-GST and Rs 45,069 crore through Integrated-GST (IGST). As much as Rs 7,620 crore was collected as cess levied on luxury goods, according to data.
As reported by the Hindustan Times, M S Mani, Partner, Deloitte India said: “The lower collections seem to be on account of the lower GDP growth numbers that we have seen as GST is a transaction tax that is immediately impacted by any decline in any economic activity. However, the subsequent festival season is expected to improve collections”.
Niraj Bagri, Partner, Dhruva Advisors said: “The September month GST collections of Rs 91,916 crores is a significant drop if one compares the last few months data. This could indicate a reduction in economic activities. With the announcement of income tax reforms, any further dip in GST collections would be a cause of concern for the government.”
Parag Mehta, Partner, N A Shah Associates LLP said GST collections in September are a cause of concern. “It indicates a major economic downturn. Hopefully, the recent amendments in income tax act and decisions taken in 37th GST council meeting reducing rates and other measures to turnaround the economy should show results in the next two months. Further, with festive seasons setting it should revive the economy”.
(With media inputs)