Revenue from the Goods and services tax (GST) tanked to the lowest level in the current fiscal year to Rs. 93,960 crore in August as against Rs. 96,483 crore in July, the finance ministry announced on Saturday.
However, the compliance rate witnessed a rise with 67 lakh filing their summary sales GSTR-3B return for June (numbers are announced for the previous month), as compared to 66 lakh returns filed a month ago. It is to be noted that GST revenue collections in the inaugural month of its roll-out of July 2017 (collected in August) stood at Rs. 93,590 crore.
The reasons attributed to the low GST collection this month was seasonal factors as well as a probable deferment of purchases by consumers after rate cuts were announced by the GST Council on July 21. The rate cuts were made effective from July 27.
Although the August collection of the revenues through GST was above Rs. 90,000 crore, it fell 6.4 percent short of the targeted average goal of Rs. 1 lakh crore. This April, the GST collection went over Rs. 1.03 lakh crore and the average collection for the period between July 2017 - March 2018 stood at Rs. 89,885 crores.
The finance ministry highlighting the rate cuts said that "One of the main factors for the dip in tax revenues is probable postponement of sale of items for which tax rate was reduced by the Council as the decision to reduce the tax rate was taken in meeting held on July 21 while the notification of the reduced rate came into effect only from July 27, 2018."
The official of the finance ministry also said that the market takes some time to pass on the benefits of the reduced taxes; customers probably have deferred their decision to buy to get the benefits lowered prices. "The actual impact of the reduction of the rate of taxes would be observed only from next month onwards as the rate reduction would have got affected only in last few days of the month," it said.
The ministry gave reference to the past trends of indirect tax collection to infer that July collection is 8.2 percent of the total annual collection while August collection was at a lower level of 7.7 percent.
