According to views of NITI Aayog vice Chairman, Indian economy is expected to grow by 10 percent in current fiscal and by 8% plus in financial year 2022-23. It may be noted that IMF has already projected a growth of 9.5% in 2021. It has said that India is likely to be the fastest growing major economy for next five years.
FMCG sector in India is on a rising spree-thanks to increased consumption, demand and improved business sentiments. FMCG is now a new normal-Fast moving consumption demand. This will enhance growth as well as tax revenues. India’s business growth is being looked as the fastest in Asia for many companies. In some cases, demand has surpassed the pre-Covid levels. Fiscal deficit has hit a four year low and revenues have grown significantly.
Festive season has begun well. Festive fervor has resulted in demand surge a for gifting, appliances, FMCG and consumer durables and electronics sectors. Health sector has also found its place in corporate gifts a surprise addition. Corporate gifting which was at a low last year has now shown a surprise comeback with a bang in 2021. Thanks to no trace of third wave of Covid till now and which is also not expected in near future, booming investments and surplus liquidity- there is a overall growth in all sectors across the board. Tourism has also started showing rise in demand and people willing to travel. Once the travel restrictions are removed globally, there are all chances of growth in travel and tourism sectors too, including hospitality sector. On yet another positive note, credit card spends have grown by about 60% on YoY basis till September, 2021.
The Government managed to collect over 60% of the budgeted revenue receipts in the first six months of the fiscal ending September, data released Friday showed, the highest ever H1 collection. The Government of India’s gross tax revenues recorded a substantial 50% growth in September, 2021, benefitting from robust advance taxes amid a formalization of the economy.
GST Council’s next meeting ought to be held, sooner the better, to fix the various issues confronting trade and industry. It also need to sort out the issues of compensation cess and bringing the most demanded items in GST net, i.e., petroleum and products and gas, besides electricity.
Much simplification of rates is also due-may be to have a maximum of three slabs and then merging into two rates. There is also a need to review compensation cess in order to abolish the same and have some other formula to compensate the shortfall states. Infact, it is burden on the country and the country men.
GST collections for the month of October, 2021 have been announced. The gross GST revenue collected in the month of October 2021 is Rs. 1,30,127 crore of which CGST is Rs. 23,861 crore, SGST is Rs. 30,421 crore, IGST is Rs. 67,361 crore (including Rs. 32,998 crore collected on import of goods) and Cess is Rs. 8,484 crore (including Rs. 699 crore collected on import of goods). The revenues for the month of October 2021 are 24% higher than the GST revenues in the same month last year and 36% over 2019-20. During the month, revenues from import of goods was 39% higher and the revenues from domestic transaction (including import of services) are 19% higher than the revenues from these sources during the same month last year.
It may be noted that the GST revenues for October have been the second highest ever since introduction of GST, second only to that in April 2021, which related to year-end revenues. This is very much in line with the trend in economic recovery. This is also evident from the trend in the e-way bills generated every month since the second wave. The revenues would have still been higher if the sales of cars and other products had not been affected on account of disruption in supply of semi-conductors.
The revenues have also been aided due to the efforts of the State and Central tax administration resulting in increased compliance over previous months. In addition to action against individual tax evaders, this has been a result of the multipronged approach followed by the GST Council. On one hand, various measures have been taken to ease compliance like nil filing through SMS, enabling Quarterly Return Monthly Payment (QRMP) system and auto-population of return. During past one year, GSTN has augmented the system capacity considerably to improve user experience. On the other hand, the Council has also taken various steps to discourage non-compliant behavior, like blocking of e-way bills for non-filing of returns, system-based suspension of registration of taxpayers who have failed to file six returns in a row and blocking of credit for return defaulters. There is an upward trend in all areas, be it number of e-way bills generated which shows amount of taxable value visibly indicating enhanced economic activities, returns filed or taxes paid.
Overall, increased compliances and higher revenues is the new order emanating from efforts to plug tax evasion, action against fake ITC / invoice player and GST Council’s response to practical issues.
In times to come, with economic activities rising, businesses returning to normally and economy showing growth, GST revenue as also direct tax collection may see further growth. Going by the current trend, GST collections are bound to create new record is next 2-3 months. However, efforts on the part of Government are equally needed towards actual ease of doing business, simpler and fewer compliances, absence of harassment and minimum interference. Let the business be allowed to do business and exchequer ensure efficient tax administration, facilitate compliances and provide fear free environment. Business standard in one of its editorial last week wrote that GST is still a work-in-progress and it must be reformed to achieve its potential. It talks of correcting the fundamental errors made in initial years, more efforts by Sate Governments, simplification of rates, issues of revenue sharing and so on.
Owing to festive season in October – November, 2021 and overall buoyancy in business, it is expected that GST revenues are likely to have a rising trend in November / December, 2021 too.
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