GST collections in March slipped below the psychological Rs 1 lakh crore mark for the first time in four months to Rs 97,597 crore as COVID-19 lockdown that shut most businesses compounded tax collection woes in an already sluggish economy.
Goods and Services Tax (GST) mop-up in March recorded an 8.4% decline over March 2019 collection of Rs 1.06 lakh crore. The collections were lower on account of dip in revenues from domestic transactions as well as imports.
Collections in March were for sales in February and, with the coronavirus lockdown in March, the numbers for the next month look grim. Unlike in previous months, when it was the GST on imported goods which were hobbling growth, the latest numbers point to domestic slowdown as well given that the levy on transactions within the country generated 4% lower revenue.
GST on imported goods was down 23% as compared to March 2019.
Three major reasons have been highlighted by the field formations are due to the shift of BS-IV to BS-VI, auto manufacturers are going slow leading to a huge impact on the GST collections. Auto majors do not want an excess inventory of BS-IV and due to disruptions of supplies from China, BS-VI manufacturing has also taken a hit.
Secondly, both B2B and B2C impact of delayed supplies from China on account of the coronavirus outbreak, which has lead to non-availability of products in the B2C markets. And supplies of raw materials have been hit for B2B players, which is impacting both manufacturing and sales in various industries.
The third being, the on-going slowdown in the overall economy, be it in exports, imports, domestic market sales leading to a decline in collections.
Meanwhile, it is also understood that the field formations are trying hard to keep the GST collections, at least above Rs 1 lakh crore mark, which is taken as a cut of for a decent collection number.
