Indian economy has started picking up, if GST revenue for October, 2020 is any indication. Finance Minister has also signaled that economy has started growing and India may be among the fastest growing ones by text year. Government has already prioritized spending in infrastructure sector. Revival of demand and consumption; focus on sectors like infrastructure, agriculture; support to financial sectors and pension and sovereign funds in particular are likely to spur growth. However, few sectors like real estate, specific infra related areas, core industrial sectors (except agriculture, health care) may not perform that well. This fiscal, GDP growth rate, according to FM, is likely to be near zero.
However, Reserve Bank of India has cautioned last week only that there are difficult times ahead for states and federalism. Fiscal deficit may surge beyond 4% of GDP, due to Covid 2019 impact. According to RBI, tax revenues are likely to fall in near future. With states in the vanguard of the fight against the pandemic, fiscal pressures are expected to intensify with surging expenditure and loss of revenues owing to demand slowdown.
Advance rulings continue to create ripples in the world of interpretation, adding to litigation and confusion. It is high time that Authority for Advance Rulings are more professional and independent in their approach with people of at least Commissioner rank running the show. Then only some credibility would be brought in to the rulings pronounced.
On Compensation Cess, Union has now transferred Rs. 6000 crore to various 16 states as a first tranche of borrowing to meet GST compensation shortfall. This borrowing has been done @ interest rate of 5.19 percent with tenor of 3-5 years.
CBIC has extended the last date for filing IT and GST returns. In GST, date for annual return and GST reconciliation statements (Form 9 and 9C) have been extended upto 31st December, 2020.
October was the last date for filing returns in which more than 7.5 million returns were filed till 25 October. This indicates substantial economic revival and increased revenue in near future. Also, GST e-invoices have also shown good response in its first month of introduction. About 2.4 million invoices were being generated daily.
GST collections cross Rs. 1 lakh crore for the first time on in current financial year (i.e. in Covid era). The gross GST revenue collected in the month of October, 2020 is Rs. 1,05,155 crore of which CGST is Rs. 19,193 crore, SGST is Rs. 25,411 crore, IGST is Rs. 52,540 crore (including Rs. 23,375 crore collected on import of goods) and Cess is Rs. 8,011 crore (including Rs.932 crore collected on import of goods). The total number of GSTR-3B Returns filed for the month of October upto 31st October, 2020 is 80 lakh. The revenues for the month are 10% higher than the GST revenues in the same month last year. During the month, revenues from import of goods was 9% higher and the revenues from domestic transaction (including import of services) are 11% higher that the revenues from these sources during the same month last year. The growth in GST revenue as compared to that in months of July, August and September, 2020 of -14%, -8% and 5% respectively clearly shows the trajectory of recovery of the economy and, correspondingly, of the revenues.
It is hoped that GST Collections will grow further in coming months owing to surge in demand & consumption and festive months. The revenue growth on YoY basis of more than 25% was seen in states of Arunachal Pradesh, Mizoram, Dadar & Nagar Haveli and Chhattisgarh. However, States like Andaman Nicobar, Lakshadweep, Goa, Meghalaya, Sikkim, UT of Chandigarh and Delhi showed negative growth.
Now that due dates have since been extended, recovery being visible and collection of tax showing up, it is time for celebrations all around.