The NDA government’s growth-oriented measure seems to have triggered the growth in GST collection in December. As per the Finance ministry, the total GST collection for the month of December stands for INR 1.15 Lakh crore. The said month witnessed the all-time high record that stood at INR 1.5 lakh crore.
According to government data, the revenues for the month of Dec 2020 are 12% more as compare to the previous year’s figure of the same month. In Nov, 2020, the collection of Goods and Services tax had surpassed INR 1 lakh crore mark.
Data from Nationwide GST Collection in the month of December
A significant hike in the GST collection was seen in Dadra and Nagar Haveli, with an annual growth was accounted for 68%. GST collection during Dec 2019 was stood at INR 154 crore, and in 2020, it accounted for INR259 crore. The northeast state of the country i.e. Tripura, witness the second-highest hike in collection that stood at 25% in terms of annual growth. The Central GST accounted for INR 21,365 crore & the state GST stood at INR 27,804.
For the December month, the collective GST figure stood at INR 57,426 crore (including INR 27,050 crore collected on the importation of commodities) & cess at INR 8,579 (including INR 971 crore collected on the importation of commodities). Almost 87 lakh GSTR-3B returns have been filed by the taxpayer for the month of Nov up till Dec 31, 2020.
Out of INR 40,957 of IGST, the government has settled Rs 17,681 crore to SGST and Rs 23,276 crore to CGST as a regular settlement. The total revenue recorded by the government after regular settlement in the December month 2020 is INR 44,485 for SGST and Rs 44,641 crore for CGST.
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Surpassed Hike Rate
The GST revenue in the month of Dec 2020 has surpassed INR 1.15 lakh crore, which beats the highest collection figure of INR 1.13 crore registered in the month of April 2019. The GST collection registered in the month of Dec 2020 is considerably higher as compared to the previous month’s revenue that stood at INR 1.04 crore. This is the highest figure registered in terms of monthly revenues in the past 21 months. The hike in GST collection is due to the collective effects of the prompt economic recovery & the nationwide drive against the defaulters and fraudulent bills, along with several well-planned changes introduced lately, which have led to improved compliance.
Viable Reasons for Record-Breaking GST collection in Dec 2020
Government efforts to cope with the recent economic crisis seem to be paying off as the year 2021 came up with promising GST collection figures of last year. According to the finance ministry, the GST collection for the month of December 2020 stood at 1.15 lakh crore, which is an all time record in terms of monthly collection.
Following are the viable reasons behind this considerable hike in GST collection in December, which are given below:-
Festive Sales and Restocking
One of the apparent reasons for the hike in GST collection could be the prompt recovery of the economy as lockdown rules were relaxed. Monthly-wise GST collection has been manifesting higher year on year numbers since the month of Sep 2020, showing the economy’s recovery.
Festive sales in the month of Nov and restocking by retailers during the festive season could have resulted in a hike in the collection during December.
Hike in GST Collection from Imports
The Indian Government states that the GST collection due to domestic transactions registered 8 percent growth while GST from importing goods rose by 27%. GST from importation activities in Dec 2020 was stood at INR 24,050, almost INR 6000 crore more as compared to the preceding year figure that stood at INR 21,295 crore
So what is the reason for the hike in GST collection on import even in this unfavorable situation? This hike indicates that the foreign trade activities are coming back on track – however; the sector based import data would offer more clarification on the linkages of the imported goods with domestic export & manufacturing.
Increased Vigilance for Curbing Tax Evasion Activities
Some experts claimed that the heightened vigilance by the revenue department is one of the primary reasons for the hike in the GST collection. The government has speed up its operation to identify and penalized the non-filer and fake billers. Such activities help the government curb tax evasion activities and raise the collection level over time.
In the month of Oct & Nov 2020, almost 1.63 lakhs registration has encountered cancellation General of GST Intelligence (DGGI) owing to non-filing of GSTR-3B returns for more than 6 months. The increased vigilance activities in the past months have effectively curbed the fraudulent activities as various fraudsters have been caught. They also lodged 1768 complaints against the 5,745 GSTIN entities.
Conclusion
It’s amazing how the GST collection figure in 2020 stack up against the previous year’s figure despite the unprecedented economic crisis caused by the COVID-19 outbreaks. The improved figure reflects the government’s competency and its dedication to ensuring sustainable growth even in tough times.
The decisions like intensification of vigilance and deployment of relaxed lockdown norms enabled the government to reap consistent GST collection as businesses finding it easy to sustain longer and pay taxes amid the tough times. Where GST collections were expected to encounter a severe dip at the start of the Covid 19 pandemic[1], the result in the final quarter shows a positive sign of growth.
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