Budget 2019: Govt may fall short of Rs 1.5 lakh crore GST target
The GST trend in FY19 so far has been a mixed bag, with only two months posting over Rs 1 lakh crore revenue collection. It needs to be noted that, the centre estimated Rs 12.9 lakh crore
The Prime Minister Narendra Modi-led government has been very optimistic about its Goods and Services Tax (GST). This regime which finally saw reality back in July 2017, was always on and off the table since the past 16 years. Hence, GST is one of the biggest reform made by the Modi government. Interestingly, in Budget 2018, the government made a very bold move and announced a GST revenue target for FY19 to Rs 12.9 lakh crore. However, looks like this regime may play a killjoy for the NDA government as they may fall short of Rs 1.5 lakh crore in their GST revenue target for FY19.
CLSA says, “We estimate a total FY19 GST shortfall at Rs1.5trn or 80bps of GDP. While this is largely to the Central Govt’s account, since the Central Govt shares 42% of its own revenues with states, the shortfall will effectively reflect for both state & central govt.”
Data up till December 2018 is given by Ministry of Finance, which shows that total gross GST revenue stood at Rs 94,726 crore in the last month of 2018. From which CGST came in at Rs 16,442 crore, SGST at Rs 22,459 crore, IGST is Rs 47,936 crore (including Rs 23,635 crore collected on imports) and Cess is Rs 7,888 crore (including Rs 838 crore collected on imports).
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Total revenue earned by Central Government and the State Governments after regular settlement in the month of December 2018 is Rs 43,851 crore for CGST and Rs 46,252 crore for the SGST.
(Image Source: PIB)
The GST trend in FY19 so far has been a mixed bag, with only two months posting over Rs 1 lakh crore revenue collection. It needs to be noted that, the centre estimated Rs 12.9 lakh crore
GST revenue for FY19, which meant on a monthly basis the collection was seen to come at Rs 1.07 lakh crore.
Monthly basis target is still a lost coast for NDA government. Lowest GST revenue collection came in during August 2018, where it stood at Rs 93,960 crore. It was in the beginning of fiscal year FY19, when GST revenue stood highest over Rs 1.03 lakh crore in April 2018. Over Rs 1 lakh crore revenue was then collected after a five months gap later in October 2018 month.
However, end of 2018 was not looking good for government, as GST revenue decelerated to Rs 97,637 crore in November 2018 and further to Rs 94,726 crore in December 2018.
Overall in nine months, GST revenue stood at a cumulative Rs 8.71 lakh crore which falls short of Rs 4.19 lakh crore to meet the budget 2018 target. Considering only three months are left for FY19 to end, CLSA believes by end of this fiscal government will see the loss of Rs 1.15 lakh crore GST revenue target.
Because of this, CLSA adds that the large GST shortfall keeps total indirect tax growth at just 6% vs 23% budgeted.
In CLSA’s view, this will mean that the good growth in direct taxes (17%, near target) notwithstanding, Centre’s net (of state share) tax collections would be 8ppt/Rs1.0trn short of the target.
Hence, for Budget 2019, CLSA believes, potential compliance improvement should drive a GST growth of 20% during FY20.
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