The Centre and states have collected Rs 92,283 crore as Goods and Services Tax (GST) in July, the first month of the implementation of the indirect tax regime. The amount is marginally higher than the projected target of Rs 91,000 crore, Finance Minister Arun Jaitley said Tuesday. He said that 64.42 per cent of the total registered taxpayers, excluding composition dealers and registrants in August, filed GST returns for July. The tax collection number would “somewhat increase” with more compliance, Jaitley said.
While the Finance Minister asserted that the government has exceeded its internal target of tax collection for the month of July, tax analysts noted that the amount could be somewhat different since many companies were not able to file for input tax credit due to issues with the the ‘TRAN-1’ form that was to be filled for availing transitional credit.
Based on back-of-the-envelope calculation linked to the targets in the 2017-18 Budget, Jaitley said the central government’s July tax revenue should have been Rs 48,000 crore and that of states at Rs 43,000 crore. The combined target of the two is Rs 91,000 crore, he said, adding that they have “exceeded the target”.
Responding to a query, he said it would be too early to comment about the impact on fiscal deficit based on the July tax numbers. Of the total GST of Rs 92,283 crore for July, the amount collected as Central GST (CGST) has been Rs 14,894 crore and State GST (SGST) has been Rs 22,722 crore, while Rs 7,198 crore has flowed in by way of compensation cess on demerit goods.
An amount of Rs 47,469 crore has been collected as Integrated GST (IGST), including Rs 20,964 crore as IGST from imports. However, the exact division of revenue collected between states and Centre can be ascertained only after cross-utilisation report for IGST for the payment of SGST and CGST is prepared by the GSTN (GST Network). This exercise is expected to be completed by August 31, Revenue Secretary Hasmukh Adhia said. Also, 42 per cent of the CGST revenue will be devolved to the states (as per the 14th Finance Commission recommendations), he said.
Excluding composition dealers and those taxpayers who registered in August, 59.57 lakh taxpayers were supposed to file returns for July, Jaitley said. “We have seen compliance of 64.42 per cent in July. 38.38 lakh people have filed returns out of 59.57 lakh registrants,” he told reporters. So far, 72.33 lakh taxpayers have migrated to the new GSTN system, out of which 58.53 lakh have completed all formalities, he said, adding that the number of new registrants on GSTN was 18.83 lakh.
Payments are trickling in even after August 25, he said. “When more compliances take place by the latecomers, the compliances will somewhat increase,” he said. “As far as central government is concerned, we fix an indirect tax target at the beginning of the year. We can work backwards by excluding the customs duty out of it, so three months we had the central excise and service tax and the balance amount has to come through GST…” “So, if we equally divide the amount specified in Budget, one will get the per month anticipated figure… if you calculate the figure, the central government’s target is calculated on the Budget bifurcation principle that what should come into our kitty for July has to be Rs 48,000 crore and if you add to the states’ 2015-16 collection, and add 14 per cent twice over, the states should get Rs 43,000 crore. So the combined target of the two has to be Rs 91,000 crore… with 64.42 per cent we have already exceeded the target,” Jaitley said.
For those who haven’t yet paid the GST, a late filing penalty of Rs 100 per day for CGST and SGST each will be levied, he said. Tax experts said that though return filing has been low in the first month, the trend is expected to improve in the coming months. They also said it is difficult to compare the tax numbers with the earlier regime due to exclusion of petroleum and other products from the GST regime.
“The compliance of 64.42 per cent achieved in the first month should be viewed considering the fact that several forms required were released late and many clarifications were provided during the later part of August. There would be several taxpayers who may now file the GST return on a delayed basis, paying a small delayed payment fee. It is expected that the return filing would significantly increase in the coming months,” M S Mani, Senior Director, Deloitte Haskins & Sells LLP said.
“The number of returns filed have been very low, especially since only summary returns were to be filed this time,” said Abhishek Jain, Tax Partner, Ernst & Young. “In the initial months, the data (of tax collections or the number of returns filed) is likely to be skewed but things will settle down over the next six months,” he said. The initial tax collection data could be inflated, Jain said, since many people could not take credit for input taxes due to problem with TRAN-1 and issues with the (offline TRAN-1) utility.
Asked whether the government will allow rectification in the TRAN-1 form for transitional credit, Adhia said that no decision had been taken yet.