Use of GST data in national accounts in limbo 3 years after tax roll-out

Difficult to gauge from state GST revenues collections whether or not economic activity is picking up, say experts

There has been a demand to use goods and services tax (GST) data for national accounts. However, even after three years of the roll out of the indirect tax system, the issue remains hanging. 

Why is this so? Former chief statistician Pronab Sen says it is not difficult to use GST data for national accounts. The issue is the GST authorities are not sharing the data with the Ministry of Statistics and Programme Implementation (MoSPI), he explained. 

He said the point is that GST is a value-added tax. "From the past data, you should know what rate is applicable to any given unit. Is it 28 per cent, 18 per cent, 12 per cent or five per cent? You should then be able to use that value-added tax to convert it into value of output," he elaborated.

Sen, who is now the country director at International Growth Centre (IGC), further explained that value-added tax is a mark-up on the ex-factory price. The ex-factory price does not contain the tax itself. If you can have the ratio between ex-factory price and GST, then you can work backwards.

On why MoSPI does not use GST data when it is in the public domain, he said,"That won’t work. I want product-wise and location-wise data. Otherwise, how will I estimate the state-level and segment-wise numbers," he said.

But why are GST authorities not sharing the data with MoSPI? To this, he said is because they feel that confidentiality will be breached.

"(But) that won't be so because the Collection of Statistics Act guarantees the confidentiality of data," he pointed out.  

The whole point of Collection of Statistics Act is that you could shift the liability of confidentiality on to the agency which is asking for the data. 

Confidentiality applies to the GSTNetwork and the Central Board of Indirect Taxes and Customs (CBIC) as of today. If the data is taken under the Collection of Statistics Act, the same confidentiality will apply to MoSPI as well, he pointed out. 

In fact, the confidentiality clause is more stringent in the Collection of Statistics Act. If the data is leaked, the officer concerned can even be sent to jail, Sen said.

A former MoSPI official said everybody feels GST will be a huge data source. If you look at the various forms of GST, they contain lots of information, establishment wise. 

"Some do it monthly, some do it quarterly. And all of this is computerised. If made available, it would be very useful," he said. 

However, one key issue is that the process of GST has not stabilised.

Changes are still ongoing to the GST regime. "Who has to file, what will be the frequency -- these are being changed. GST's ability to be used in statistics is compromised to that extent," the former official explained. 

Initially, the GST Council had come out with three forms -- GSTR1 (sales returns), GSTR2 (purchase returns) and GSTR3 (input-output returns). However, because of the complexities in filing the returns, the GST Council suspended GSTR2 and GSTR3 forms for a few months, till the new simplified returns came. 

However, assessees will have to file GSTR1 and GSTR3ab (summary input-output returns). Returns are to be filed monthly or quarterly, depending on the annual turnover of companies. Earlier, everyone had to file monthly returns, but the GST Council had decided that those with an annual turnover of up to Rs 1.5 crore can file quarterly returns. Later in July, 2018, this limit was raised to Rs five crore. 

Meanwhile, the work on simplified returns continued, but because of the complexities involved, these were deferred a number of times and are yet to see the light of day. 

The ex-MoSPI official explained, "What we were keen on was that the GST data be made available to us like other data is made available for compilation of statistics. And if it is made available in the granular form, it will help in a lot of analysis."

At the moment, what is being put out in GST is much less than what could be done, he said.  

He said the best example of data sharing is by the Customs department. There is an office under the Commerce Ministry – the Directorate General of Commercial Intelligence and Statistics (DGCIS) — which compiles granular data so as to give you a very disaggregated product classification.

They give you trade data both origin- and destination-wise, he said, adding that they produce lots of reports on the basis such information. 

"That is because the Commerce Ministry’s office has been given very specialised computer access to the Customs database," he said.

GST collections state-wise:

The finance ministry released GST figures state-wise after a gap of three months. The figures pertained to domestic transactions and do not include imports. The data broadly showed that economic activity is yet to pick up in states.

For instance, GST collections in Maharashtra were down one per cent in June year-on-year against a 12 per cent growth in February and a 19 per cent rise in January. A few industrialised states that showed growth in June, such as Andhra Pradesh and Karnataka, also saw growth coming down to six and one per cent respectively in the month, from 23 per cent and 15 per cent respectively in the previous month. 

It should be noted that GST collections in June are for transaction in the month of May and so on. When asked whether the collection figures could be taken as the indicator of activities in the states, Sen replied in the negative. 

“No, you cannot (take these figures as a signal of economic activities). For instance, Karnataka is showing one per cent growth in June. Let's say the units that have opened up are engaged in luxury products that attract 28 per cent tax, and the rest are closed. So your collections will improve. There is an issue because of multiple rates. With a single rate, there would not be any issue,” he said.

It should also be noted that GST is a destination-based tax and this point should be borne in mind while gauging economic activity from the state collection figures.

Aditi Nayar, principal economist at Icra, said the GST collections in the predominantly producing versus consuming states may display a variable pattern as the economy gradually opens up.

“During the initial unlock period, consumption may record a temporary rebound close to the pre-covid levels for essential items. However, production would be ramped up slowly across a wide range of items,” she said. 

Year-on-year GST collection growth for some states
State	January 2020	February 2020
Tamil Nadu

8 8 West Bengal 7 13 Gujarat  19 11 Uttar Pradesh 4 13 Maharashtra 19 12 Andhra Pradesh 9 23 Karnataka 4 15

Figures in percentages; Source: finance ministry

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