Goods and Services Tax (GST) collection slipped and hit the lowest in October since the new tax regime rolled out on July 1. GST collected for October stood at Rs 83,346 crore as on November 27, a finance ministry press release said.
GST collection was lowest in October primarily because businesses used input credits to offset their liability, reported BloombergQuint.
GST data shows that in September, the Central government has collected the highest GST in tune of Rs 92,150 crore, which is almost Rs 9,000 crore or 9.5 percent higher than that of October collection.
Earlier the government had mopped up Rs 90,669 crore in August and Rs 92,283 crore in July.
"As and when the final transaction of these goods takes place, the credit of IGST is being utilised for payment of SGST and CGST and therefore, the inflow of new taxes is low," the statement said.
The significant drop in GST revenue compare to previous months can pose serious financial implications in the future. The figures do not even include rates cut by the GST Council in its last meeting which came into effect from November 15.
"...the government has still not disbursed export-related refund, estimated to the tune of Rs 50,000 crore. Besides, transition credits were availed by taxpayers even in previous months and not just in October," Abhishek Jain, indirect tax partner at EY India told BloomberQuint.
However, union finance minister Arun Jaitley is still hopeful that the final tally for October will be higher. He expects another Rs 5,000 crore in GST collection for the month.
GST revenue collections for November could be even lower, as the rates of over 178 items were lowered to 18 percent from 28 percent. The subdued collection could further affect the already worsening fiscal position of the Centre and states.
Moreover, the Central government paid states Rs 13,695 crore for the revenue lost in September and October, which was Rs 10,806 in July and August, the release said.
According to the Goods and Services (Compensation to States) Act, 2017, the Central government will compensate states for any losses in the first five years of GST implementation.
