The goods and services tax (GST) receipts of the central and state governments, which touched a record high Rs1.41 trillion in April, could come off its peak in May, indicate data on the number of electronic goods movement permits generated during April.
Taxes for April sales are paid in May. Data showed that e-way bills generated for movement of goods within and across states in April has dropped by 31% to 4.89 crore from the 7.1 crore bills reported in March. Movement restrictions are in place in several parts of the country as the authorities sought to break the chain of coronavirus infections.
The e-way bill generation data for April compares with the levels seen in July and August 2020 when monthly e-way bills generated remained below five crore and the economy was beginning to come out of the impact of the national lockdown. The corresponding GST receipts for those months were below Rs1 trillion a month—Rs86,449 crore in August and Rs95,480 crore in September.
GST receipts in subsequent months stayed above Rs1 trillion, reflecting the economic recovery and a host of efforts by the tax authorities to check tax evasion, including a drive against the use of fake invoices by businesses.
The finance ministry attributed the record tax collection in April to sustained economic recovery and the resilience of the industry, while Industry watchers pointed to a spike in transactions in the last month of the fiscal that ended in March, higher spending that is usual during elections and higher commodity prices. As the financial year draws to a close, businesses tend to send out shipments to meet their targets for the year.
There are lockdown-like curbs on movement and assembly of people in many parts of the country, including in large state economies such as Delhi, Maharashtra, Uttar Pradesh and Haryana.
“The moderation in e-way bill generation in April reflects the supply chain disruption and slowdown in consumption as discretionary spending is affected by the pandemic. This would have an impact on GST receipts in May for the sales in April. Containment of the second wave of the pandemic and easing of mobility restrictions will help GST receipts to recover, which will also be aided by the pent-up demand,” said Abhishek Jain, tax partner at EY.
The second wave of the pandemic has already raised doubts about a rebound in economic growth in FY22 after an expected 7.7% contraction in the year before.
Crisil Research said in a report on Monday that the second wave of the coronavirus infections, considered an urban phenomenon, was closing in on rural India and that the state announced restrictions are now telling on indicators such as mobility, toll collection and railway freight loading.
Source: mint
