The Many Ways to Read the GST Revenue Data

The Goods and Services Tax revenue collection declined in November.

The Goods and Services Tax is a complicated affair.

(Photo: The Quint)

There are many different ways to read the Goods and Services Tax revenue collection data for the month of November. Let’s start with listing the latest available data.

GST Revenue

• July: Rs 92,283 crore (later revised to Rs 94,063 crore)
• August: Rs 90,669 crore
• September: Rs 92,150 crore
• October: Rs 83,346 crore
• November: Rs 80,808 crore

Taxpayers registered under GST as of 25 December: 99.01 lakh

Composition Scheme Dealers: 16.6 lakh

GST Returns Filed

• July: 38.38 lakh – revised to 58.7 lakh
• August: 37.63 lakh – revised to 58.9 lakh
• September: 42.91 lakh – revised to 57.3 lakh
• October: 50.1 lakh
• November: 53.06 lakh

How To Read The November GST Revenue Data

1. That it’s over Rs 2,500 crore lower than the October number, which in itself was much lower than the September collections. That may be construed as bad news as over time a wider base and better compliance should have boosted revenue and not reduced it.

2. Don’t forget that November saw the GST Council cut rates for over 200 items. The estimated annual revenue loss (as mentioned by one Council member) was to be Rs 20,000 crore and that works out to roughly Rs 1,600 crore per month. So much of the Rs 2,500 crore gap between November and October could be attributed to that.

3. Also October was a festival month and so it’s no surprise collections were higher in October than November. Though, in all honesty, that should just shift the focus of concern on to the October data as the festival season should have translated into higher-than-September revenues, which it didn't.

As of now the number of returns filed also seems to have declined — from 57.3 lakh to 50.1 lakh. But that may not be sacrosanct as data revisions continue.

4. None of this is worrisome as the government is still on track to achieve revenue neutrality by some estimates. One, to be specific. Credit Suisse’s India Equity Strategist Neelkanth Mishra computes revenue neutrality to be at Rs 10.6 lakh crore per annum, roughly Rs 88,000 crore per month.

By that measure the government should have collected Rs 4.41 lakh crore in the first five months of GST, July-November.

The actual collections add up to VOILA... Rs 4.41 lakh crore. Phew!

5. Not all revenue neutrality estimates converge. Mishra himself points out that by one computation the government puts revenue neutrality at Rs 9.6 lakh crore. No official figure has been released.

Calculations by at least two other tax experts I spoke to suggest revenue neutrality may be achieved at Rs 1 lakh crore of GST revenue per month. Pick an economist/tax expert/estimate you like, I’m sticking with Mishra.

6. Many other tax experts sent in comments after Tuesday’s data release lamenting the low revenue number.

The GST revenue collections’ downward trend continues in December, which is a cause of concern. Though the reasons can be attributed to lowering of rates in mid-November, the expansion of tax base and buoyancy due to rate reduction should have ideally checked the dip in collections. If this continues, the government may be hesitant in further rationalisation of GST rates.

Abhishek Jain, Tax Partner, Ernst and Young India

Dip in collection in revenue for November is on expected lines, as rates of over 175 items were reduced from 15 November and refunds to exporters started recently. Even for December, there could be an impact of opening credit claim for which the last date is 27 December. From January onwards, the collections should stabilise.  

Pratik Jain, Leader, Indirect Tax, Price Waterhouse Coopers (PwC)

7. Wait, the real data will show itself in the new year! Because assessees availing the composition scheme have to pay tax quarterly and so December-end should see a bump-up in numbers.

8. The Finance Ministry press statements don’t follow any standard format. So every month the data is presented differently. However, the August statement said 58.53 lakh taxpayers had migrated to GSTN. And the number of new taxpayers registered was 18.83 lakh. That’s a total of 77.36 lakh registrations.

The Ministry’s statement in November put total registrations at 95.9 lakh, including 15.1 lakh composition dealers.

Tuesday’s ministry statement says 99.01 lakh taxpayers have been registered under GST so far. Of which 16.60 have availed of the composition scheme.

9. But if more tax payers have registered under GST, 3.11 lakh between November and December, and not all of them are composition scheme registrants (only 1.5 lakh are) then shouldn’t the revenue collected in November be higher than that of October?

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(This article was originally published on BloombergQuint)

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