GST tax collection falls – what is the reason?
For the first time since September 2020, GST collection has fallen below Rs 1 lakh crore. Many are surprised to find that the GST, also known as the Goods and Services Tax, has fallen to a level not seen in the last eight months. The reason is that the tax revenue collected through GST last June has gone below Rs 1 lakh.
Background of GST
It has been four years since the GST came into force in our country. On July 1, 2017, the Goods and Services Tax (GST), the single tax system, came into force across the country, eliminating 17 taxes and 13 additional taxes. The need for simplicity in the single window taxation and taxation system was felt like the tax collection system and tax rates were different in different states, which was a great inconvenience to the industry and the general public.
In this context, the GST taxation system was first proposed in 2000. Fearing that the introduction of the GST would reduce the state’s tax revenue, manufacturing states like Tamil Nadu were initially reluctant to adopt the GST. They also said that the personal rights of the state government in taxation would be eroded and there would be a loss of excise tax revenue after the introduction of GST taxation. After many years, the federal government came to a compromise as there was no consensus among the states on the issue.
Five years after the introduction of the GST (2017-22), the new tax regime guarantees that the federal government will compensate the states for possible losses in tax collection. This pledge of the Central Government was also given legal recognition by amending the Constitution. Following this, the GST tax system came into effect on 1.07.2017 with high expectations.
Over the last eight months, traders have been collecting over Rs 1 lakh crore every month due to regular payment of GST tax even during the Corona disaster. In the last financial year 2020-21 alone, about Rs 11.36 lakh crore was collected through GST.
During the first month of the current financial year 2024-2024, the GST has gone up to an all-time high in April. 1.41 lakh crore, setting a new record. It also continued the collection in May to 1.02 lakh crore. In this case, the GST last June. Less than Rs 1 lakh crore has been collected. GST collection during the month was Rs 92,849 crore. For the first time since September 2020, GST collection has fallen below Rs 1 lakh crore.
According to a statement issued by the Union Finance Ministry, GST collection in June was Rs 92,849 crore. This includes the Central GST Rs16,424 crore in taxes and The State tax is Rs 20,397 crore and the combined GST is Rs 49,079 crore and cess Rs 6,949 crore. Last May, due to the spread of the corona epidemic, business operations were affected following the birth of complete or partial curfews in several states. Experts have commented that this has affected the collection of taxes.
Now that the curfew has been lifted in many states, business is back on track. Due to this, tax collection is expected to increase in the coming months. If the third wave of corona does not come big, the GST tax collection is likely to touch Rs 1.50 lakh crore by next Diwali.
