Economic Survey: 2nd Covid wave impact on GST much more muted than first

The impact of the second wave of Covid-19 on GST collection was much more muted than the impact of the nationwide lockdown during the first wave, The Economic Survey for 2021-22 noted.

After falling during the nationwide lockdown in 2020-21 and during the second Covid wave, there was a quick recovery in monthly GST collection.

Over the last four years, GST revenues have steadily grown and the year-average of monthly GST collection has increased from Rs 0.9 lakh crore in 2017-18 to Rs 1.19 lakh crore in 2021-22 (up to December).

The improvement in GST collection has been due to the combined effect of the rapid economic recovery post the pandemic, the nationwide drive against GST evaders and fake bills along with many systemic changes introduced recently, and various rate rationalisation measures undertaken by the GST Council to correct the inverted duty structure.

 

With the revival of the economy, the Goods and Services Tax (GST) has emerged as a buoyant source of revenue for both the Centre and the states.

The GST collection for the Centre was 61.4 per cent of Budget Estimate (BE) during April to November 2021. Gross GST collection, Centre and states taken together, was Rs 10.74 lakh crore during April to December 2021, which is an increase of 61.5 per cent over April to December 2020 and 33.7 per cent over April to December 2019.

Notably, the average monthly gross GST collection for the third quarter of the current financial year was Rs 1.30 lakh crore, higher than the average monthly collection of Rs 1.10 lakh crore and Rs 1.15 lakh crore in the first and second quarters, respectively.

The indirect tax receipts registered a YoY growth of 38.6 per cent in the first eight months of this fiscal. The rise in imports of goods and services ensued due to the recovery in both manufacturing sector and consumption demand, leading to a rise in Customs collection.

The revenue collection from customs during April to November 2021 has registered a growth of almost 100 per cent over April to November 2020 and over 65 per cent compared to April to November 2019.

The revenue from excise duties has registered a YoY growth of 23.2 per cent during April November 2021. The Government had raised the excise duty on petrol and diesel to garner revenues during the year 2020-21, when the collection of other direct and indirect taxes was adversely impacted by COVID-19 and low global petroleum prices created some elbow-room for raising taxes on petroleum.

The revenue from excise duty registered an YoY growth of more than 60 per cent in 2020-21 PA. However by the end of November 2021, when the global oil prices had increased, other tax revenue sources had recovered and inflationary pressures were building up in the economy, the government changed its' policy as per the requirement of the situation, and the Central excise duty on petrol and diesel was reduced.

Such a responsive feedback-based policy making by the government is imperative for ensuring efficient management of limited fiscal resources in the economy. The revised estimates would give more clarity on the impact of excise duty cut on the tax revenue during the current financial year.

--IANS

san/arm