The lockdown and overall decline in consumption due to coronavirus outbreak might lead to a severe decline in the GST revenue mop-up for March and April 2020. Although there is no clear agreement as to what extent the GST collection will be hit, the pandemic’s impact will be seen in both current and the next financial year. Multiple sectors including travel, food, and hotel have witnessed a sharp drop in demand and hence the output.

GST Collection

It was anticipated that sectors such as hotel, trade, communication, broadcasting,and transportation would generate services worth of ₹33 lakh crore in the current fiscal. However, after the outbreak, this number might be revised downward, also affecting the GST collections. Businesses are operating at a minimal level due to the closure of offices and the lockdown across the country.

An SBI research report said, “On an aggregate basis, we estimate that the impact of a 5 per cent inoperability shock could be 90 basis point on GDP from Trade, Hotel and Transport to Storage and Communication segment. It could be spread over FY 2019-20 and 2020-21, with a larger impact in the FY21.”

The exports of commodities are expected to decline by at least $10 billion in the current fiscal. The GST collection is likely to increase, only when the consumers will start using various services and the consumption will return to normal. Moreover, coronavirus’s impact on sectors such as tourism, hotels, and restaurants will bring down the revenue mop-up from the service sector.

The earning from international tourism is about $30 billion, which is to be severely impacted due to the proposed one-month travel ban. Furthermore, imports will also decrease with China’s supply chains being disrupted, bringing down GST collection levied on imports. Due to the reduction in imports, GST saw a decline of 2% in February.

In March, the government had targeted to collect ₹1.25 lakh crore through GST which seems unlikely now. The monthly collection in February stood at ₹1.06 lakh crore against the target of ₹1.10 lakh crore set by the revenue department. The Central government had revised the budget estimate with the expectation of ₹6.12 lakh crore in GST collection in the current financial year. Till January, the collection has been around ₹5 lakh crore.

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Chief Development Officer (CDO) at HostBooks Limited with an experience of 18 years spread across Finance & Accounts, Banking, IT & Development, Investment Banking, Sales & Co-founding Startups. Having worked at senior position in OFB, DG Mezzanine Fund, DLF, E&Y & Maruti-Suzuki, View Full Profile

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April 2021