E-way bill spike in March hints at record rise in GST collection
Electronic permits for goods shipment within and across states in March have shot up to 78.1 million, the highest since November 2020 for which data is readily available, indicating that Goods and Services Tax (GST) revenue collections in April could surpass the all-time high seen in March.
Official data from GSTN, the company that processes tax returns, showed that in March, e-way generation jumped 13% from what was generated in February. Since tax returns for the sales in March will be filed and taxes paid in April, this could indicate a further jump in GST revenue collection in the first month of the new year, experts said.
Normally the last month of the financial year sees businesses trying to conclude annual sales commitments and the last month always sees a spurt in sales. The other time of the year when we see a spurt is the festive season during Deepavali," said Muralidharan R, partner, Deloitte India. GST collections had touched the highest level so far, in March at INR 1.42 trillion, official data had shown on 1 April.
E-way bill data shows actual goods shipment above a threshold that has taken place in the month. S&P Global India manufacturing purchase managers index (PMI), based on a survey of 400 producers, had suggested on 4 April a further improvement in the health of the manufacturing sector in March though its pace had moderated. PMI data for March also suggested a further upturn in production volumes, the ninth in consecutive months.
The improvement in GST revenue collection comes as good news for policymakers as it eases the pressure on revenue mobilisation through non-tax revenue measures such as divestment and proves to be a relief to state governments that are likely to lose GST compensation from June. This trend is also likely to be a key input for the central and state governments while considering further rationalisation in the GST slabs and rates for revenue augmentation. Two ministerial panels appointed by the GST Council are currently working on GST rate rationalisation and on improving the efficiency and productivity of the indirect tax system.
One of the factors that have contributed to the revenue growth is the extensive use of technology-driven oversight of economic activities. From 1 April, the government has widened the scope of the e-invoicing requirement on business-to-business transactions to cover all businesses with INR 20 crore sales and more, down from INR 50 crore earlier. The indirect tax buoyancy is also having a rub off on direct tax collections of the government as corporate sales get reported more accurately. The central government’s direct tax collection for FY22 has touched nearly INR 14 trillion, exceeding revised estimates, Mint reported on Tuesday.
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