Jump in returns filing may take GST mop-up to Rs 1 trillion this month

Experts say this may sustain for the next three months

Bolstered by a jump in returns filing, the finance ministry is hopeful that goods and services tax (GST) collections would cross the Rs 1-trillion mark in October for the first time in eight months.

Experts said GST collections are likely to be over Rs 1 trillion a month till November-December which would be reported in January and February.

As many as 7.5 million returns have been filed as of October 25 against 6.3 million till the corresponding day of the previous month, sources in the finance ministry said.

The deadline for filing summary input-output returns is 20th of the month, after the one when transactions happened.

As such, the deadline for filing returns for transactions in September is October 20. But firms keep filing returns even after that with a late fee.

In fact, GST collections posted growth in September after six months of contraction, indicating a return to normalcy in economic activity after months of disruption caused by the lockdown.

GST collection stood at Rs 95,480 crore in September against Rs 86,449 crore in August. It was at Rs 91,916 crore in September last year.

Experts said September saw a bump in collections because it is the last month for claiming input tax credit for 2019-20.

"Lots of companies would have carried out a yearly reconciliation and asked their vendors to file returns or report missing transactions," said Pratik Jain, partner at PwC.

He said, typically, sales in the last month of a quarter are slightly higher than the other two months.

M S Mani, partner at Deloitte India, said, ”Based on the encouraging collections reported last month, GST collections for the next few months are expected to be robust, considering the pent-up demand and the festive season.”

Abhishek Rastogi, partner at Khaitan & Company, said a lot of stockists are replenishing goods due to both the festive season and low inventory.

“Another factor for enhanced collections could be the rigorous actions taken by the GST authorities in the recent past to recover pending taxes, " said Rastogi.

Mani said the introduction of e-invoicing in a phased manner is also expected to significantly increase the transaction base for GST.

However, the figures for October would not reveal the impact of e-invoicing as these would be for transactions in September. E-invoicing was made mandatory from October 1 for companies with an annual turnover of over Rs 500 crore. It would be expanded from January for companies with annual turnover of over Rs 100 crore and for all companies from April next year.

Sources in the finance ministry said input-output summary returns basically reflect business-to-business transactions. However, if sales to consumers also increase around Diwali, then one can expect GST collections to remain over Rs 1 trillion for the remaining months of the year.

Jain said given the festivities, collections in November could also be robust. 

Rastogi added demand surge will remain relatively high for at least a quarter.

A GST expert said that companies with a turnover of between Rs 100 crore and Rs 500 crore will try to clear their stocks by December before they come under the e-invoicing net. As such, collections are likely to remain high till December, he added.