Economy And GST Developments

On a brighter note, it is a official statement that Indians economy has grown fastest in Q 1 of current fiscal due to strong comeback of manufacturing and construction sectors. GDP has grown @ 20.1% in Q1 of 2021-22 benefiting from 24.4% decline in Q1 of previous year. The manufacturing sector expanded by 49.6% and construction sector by 68.3%. Government feels that these numbers indicate recovery, that too ‘V’ shaped in GDP as well as GVA. Such recovery is likely to sustain. The full year growth is likely to be in 9% range only. India may reach pre-covid levels by next year. However, on a cautionary note, this growth may not be sustainable if private consumption loses steam. Both, private consumption and Government spending have to go up.

According to Chief Economic Advisor (CEA), India is likely to see robust growth due to reforms, capex push, rapid vaccination etc. India’s macroeconomic fundamentals are stronger now.

Core industries grew by 9.4% in July, 2021 on YoY basis. Almost all sectors grew except crude oil. Further, @ 21.3% fiscal deficit in April – July, 2021 is lowest in nine years with total net tax collection of Rs. 5.30 lakh crore.

While India is ahead of many other countries in growth – China (7.9%), Russia (10.3%), US (6.6%), it is close to UK (22.2%).

Given the increase in numbers of GDP growth, another school of thought feels that the growth is lower than expected, the informal sector of economy is still suffering and reeling in recession, resultant unemployment and lack of fiscal stimulus.

To increase the demand, fiscal push is needed. While Government spending is much needed, besides incentivizing public consumption, Government also needs to relax tax burden on certain products including petroleum products, so as to relieve demand squeeze in products such as petroleum products etc.  Government also needs to support SMEs and MSMEs in all aspects of their businesses. It is a fact that rising capital marks boost investor’s confidence but has not much to do with macroeconomics and microeconomics. Fresh investment needs to come to India in core and infra sectors.

CBIC has issued three Notifications Nos. 32-34, all dated 29.08.2021. The last date to avail benefit of late fee amnesty scheme for GSTR-3 B has been again extended by three months to 30.11.2021. The timelines have also been extended for filing of application for revocation of cancellation of registration to 30.09.2021, where the due date of filing of application for revocation of cancellation of registration falls between 01.03.2020 to 31.08.2021.  The filing of FORM GSTR-3B and FORM GSTR-1/ IFF by companies using electronic verification code (EVC), instead of Digital Signature certificate (DSC) has already been enabled for the period from 27.04.2021 to 31.08.2021. This has been further extended to 31st October, 2021.

There are number new updates on GSTN portal which inter alia include, implementation of rule 59(6) for details of outward supplies, HSN Codes and GSTR-1 filing, e-way bills etc.

The gross GST revenue collected in the month of August 2021 is Rs. 1,12,020 crore of which CGST is Rs. 20,522 crore, SGST is Rs. 26,605 crore, IGST is Rs. 56,247 crore (including Rs. 26,884 crore collected on import of goods) and Cess is Rs. 8,646 crore (including Rs. 646 crore collected on import of goods). Indirect tax collections are considered as a benchmark of economic activity and it is directly levied to industrial and service sector growth.

The revenues for the month of August 2021 are 30% higher than the GST revenues in the same month last year. During the month, the revenues from domestic transaction (including import of services) are 27% higher than the revenues from these sources during the same month last year. Even as compared to the August revenues in 2019-20 of Rs. 98,202 crore, this is a growth of 14%.

August of 2021 is the month which has shown the highest collection in all Augusts so far in the GST regime:

This is highest ever collection in August months irrespective of Covid or no Covid.  This reflects the actual commercial activities in July, 2021. All States and UT’s except Daman & Diu have posted positive revenue growth.

GST collection, after posting above Rs. 1 lakh crore mark for nine months in a row, dropped below Rs. 1 lakh crore in June 2021 due to the second wave of covid. With the easing out of COVID restrictions, GST collection for July and August 2021 have again crossed Rs.1 lakh crore, which clearly indicates that the economy is recovering at a fast pace. Coupled with economic growth, anti-evasion activities, especially action against fake billers have also been contributing to the enhanced GST collections.  Higher GST collection can also be attributed to easing up of lock down due to Covid and expansion of vaccination drive. The robust GST revenues are likely to continue in the coming months too.

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