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Author: Debasis Ghosh,

Vice President –Group Indirect Tax

The Peerless General Finance &Investment Company Limited

The GST collection in the month of December 2020, which is in essence attributable to economic and business transactions of November 2020 at Rs 1.15 lac crore, has recorded to be the highest GST collection since its implementation in July 2017. The GST collection in the month of August 2017 on account of July 2017 was about Rs 0.93 lac crore. The trend is encouraging for the reason that it is the third successive month during which GST collections have registered minimum of Rs 1.05 lac crore.

The higher collection can be attributed essentially to the following factors:

  • Improved economic activity despite the pandemic.

  • Implementation of reforms in a regular and phased manner like electronic invoicing for turnover of Rs 500 crore and above from 1st October 2020.

  • Extensive and intensive drive to intercept tax evasion through the E-Way Bill and other mechanisms and identify sources and pockets of tax evasion and take necessary action for the recovery of taxes.

A steady and buoyant tax collection is indicative of the wellness of the economy and its growth potential, larger compliance and consequently lesser evasion. Here, what is of significance relevance is the parameter against which the tax collection is being measured. As far as GST is concerned, there appears to be no such parameter. The measurement of tax collection is being done with respect to the collection in the previous month(s).

Without having any sort of disregard to the increasingly positive trend in the GST collections , what could be an appropriate parameter would be to assimilate the indirect tax collections of the two or three financial years preceding the financial year in which GST became operational for all taxes, duties and cess that used to be levied by the central and state governments and union territories and subsumed in GST and work out a weighted annual average and then compare such pre-GST weighted average collection with the trend of present GST collections. Here it would be important to note that the total GST collections include IGST collected on imported goods which in the pre-GST regime was collected as additional duties of customs. It would therefore be necessary to factor the IGST on imported goods which is to the tune of Rs 25000 crore in a month to arrive at a like to like comparison. It is some such mechanism that can serve as a reliable indicator as to how the indirect tax collections have fared in the GST era as compared to the pre-GST regime.

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