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In signs of acceleration in economic activity, India's tax collections on goods sold and services rendered returned to over Rs 1 lakh crore in July after the second wave of Covid-related restrictions caused a blip in the previous month.
Goods and Services Tax (GST) mop-up grew 33 per cent year-on-year in July to over Rs 1.16 lakh crore, indicating that the economy is recovering at a fast pace. In July 2020, the collection was Rs 87,422 crore.
This is the second highest collection so far this fiscal after a record Rs 1.41 lakh crore mop-up in April.
The finance ministry in a statement said robust GST revenues are likely to continue in the coming months as well.
The gross GST revenue collected in the month of July 2021 is Rs 1,16,393 crore of which Central GST is Rs 22,197 crore, state GST is Rs 28,541 crore, integrated GST is Rs 57,864 crore (including Rs 27,900 crore collected on import of goods) and cess is Rs 7,790 crore (including Rs 815 crore collected on import of goods).
The revenues for the month of July 2021 are 33 per cent higher than the GST revenues in the same month last year and include GST returns filed between July 1-31 as well as IGST and cess collected from imports for the same period.
GST tax collections had topped Rs 1 lakh crore market for 8 straight months before the onset of the second wave of COVID-19 infections led to the re-imposition of lockdowns in different states, muting economic activity.
"GST collection... dropped below Rs 1 lakh crore in June 2021 as the collections during the month of June 2021 predominantly related to the month of May 2021; and during May 2021, most of the states/UTs were under either complete or partial lockdown due to COVID.
"With the easing out of COVID restrictions, GST collection for July 2021 has again crossed Rs 1 lakh crore, which clearly indicates that the economy is recovering at a fast pace.
"The robust GST revenues are likely to continue in the coming months too," the ministry said in a statement.
In the current fiscal, GST mop-up touched a record high of over Rs 1.41 lakh crore in April, but fell to over Rs 1.02 lakh crore in May after the outbreak of second wave.
In June, collection slipped below the psychological Rs 1 lakh crore mark to Rs 92,849 crore followed by a sharp rebound in July to Rs 1.16 lakh crore.
The GST collections in July 2021 are primarily for supplies and sales made in June, when the states were easing the lockdown restrictions.
In the months of April and May, most states were under different levels of lockdown, which reduced business activity.
Deloitte India Senior Director M S Mani said the sharp increase in the collections indicates the resumption of economic activities in June and will raise expectations of better collections in the coming months.
”The improvement in GST collections both on domestic transactions and imports, accompanied by the fact that major producing states have shown significant increases, would indicate that the economic activities have resumed across the country," Mani said.
Shardul Amarchand Mangaldas & Co Partner Rajat Bose said collections are higher on the back of economic revival due to the unlocking of businesses in June.
"If the country is able to resist the third wave, the GST collections should increase from hereon,” Bose said.
EY Tax Partner Abhishek Jain said this collection number is a definite indicator of economic recovery and the uptrend is expected to continue in the coming months.
Singhania's GST Consultancy Co Partner Aditya Singhania said "with simultaneous increase in vaccination, easing out of Covid restrictions, data analytics in place, sequential spurt in e-waybill generation, GST rate rationalisation on cards, etc, we may see acceleration in revenue from GST in coming months".