Nobody expected Covid-19 to take an aggressive u-turn as is being witnessed now. Today, the daily new cases in India are past 3 lakh which is perhaps the highest in the world. The lock downs are back again in most parts of the country with complete lock down in few states. The shops and businesses are closed, migrant workers are seen back on roads and so on. We are in a scenario where we were exactly a year back with Corona phase-1 on its peak. We now have more dreaded phase-2 with lot of casualties.
Recently, our Finance Minister stated that there should be complete trust between the industry and the Government to sustain growth amid Covid 19 situation. Well said ! According to her, economic revival will continue and FY 2022 will not be about Covid. But the initiation has to come from the Government itself. The trust deficit is there which is evident. Government has to come out very clearly and announce its stand on business policies including flexibility in tax administration, providing leg room for compliances and nursing the ones in trouble. Making statements just don’t work. The actions have to be visible, tangible and benefit the masses.
However, in an appeal to the nation, the Prime Minister has urged that lockdown should be the last resort or option so that basic economic activities and livelihood continues. However, some states have already announced total or modified curfew / lockdown. India expects some relaxations and fiscal incentives this year too as the Covid-2 phase is causing more financial and other harms, however, it is not of national character this time.
In the present circumstances, Government should provide some tangible concessions in the form of postponing the due dates falling in current quarter for all taxes, filings etc. Also, interest / fine / penalties for the current quarter ought to be waived. Similarly, advance tax for this quarter may be deferred. In case of select businesses, soft loans may be provided to tide with liquidity issues. The problem of migrant workers also need to be addressed. This may provide some relief to economy as well as aid in tax collections.
The centre’s indirect tax collection rose by more than 12 percent to Rs. 10.71 trillion in 2020-21 (FY 21) compared to Rs. 9.54 trillion in the previous year, even as goods and services tax (GST) mop-up declined by 8 percent. Indirect tax comprises goods and services tax, excise duty, and customs. Customs duty collection stood at Rs. 1.32 trillion during FY 21, representing around 21 percent growth year-on-year. The collection from central excise duty and service tax (arrears) was up more than 58 percent at Rs. 3.91 trillion during 2020-21, as against Rs. 2.45 trillion in FY 20.
In the mean time, rating agency CARE has revised down GDP forecast to 10.2% for financial year 2022 in the wake of 2nd phase of Covid-19. There are certain sectors of economy (auto mobile, hospitality, airline etc) slipping into negative list. There are all chances of economic growth falling into negative territory. All this may have a bearing on GST collections and it is now expected that April and May collections will be adversely impacted and once again GST collection may come down below Rs. 1 lakh crore mark.
At last we can only say that these are times like never before. We all (including Government) should also act and behave like never before, in overall interest of one and all.