GST Collections for December 2020 Hits Record High! Here’s How

In December 2020, Goods and Services Tax (GST) collections recorded the highest growth of 11.6% yearly to Rs.1,15,174 crore. The highest monthly GST revenue is collected so far, as per the Finance Ministry’s press release on 1st January 2021.

The second highest collection was recorded for April 2019 at Rs.1,13,865 crore. According to experts, due to festive sales, restocking, and imports, GST collections peaked in December. One of the reasons why the collections were higher in December may be the festive sales in November and retailers’ replenishment before the Diwali festivities. Experts say the rise in GST collection gives trust in the economy’s growth and the increase in business activities.

Meanwhile, 8% of growth was reported due to domestic transactions. In comparison, GST from imports increased by 27%. In December 2020, GST from imports was Rs 27,050 crore, nearly Rs 6,000 crore more than GST from imports (Rs 21,295 crore) in December 2019.

There is an increase in GST collections on imports, suggesting that foreign trade is returning to normal. However, sector-wise import data will shed light on the relations between imported products and domestic manufacturing and exports.

Some experts also attribute this growth to the increased vigilance against evasion by the revenue department. For the past few months, the government has been going after non-filers and bogus billers through a slew of measures.

Also Read: GSTN Eases Taxpayer Compliance By Auto-Populating GSTR-3B Return

Around 1.63 lakh registrations were cancelled in October and November 2020 due to the non-filing for more than six months of GSTR-3B returns. Besides, 164 fraudsters, including five Chartered Accountants and a woman on a national drive for a month, were detained by the Directorate General of GST Intelligence (DGGI) and CGST Commissionerates. 1,768 lawsuits against 5,745 GSTIN individuals were also filed.

According to experts, a steady rise in the number of GSTR-3B returns filed is promising. The number was 87 lakh in December 2020 compared to about 81 lakh in December 2019.

However, the Department of Revenue Intelligence and DGGSTI authorities seek a split of the GST collected through the filing of returns and GST collected through recovery drives. It would provide a clearer image of the scale of economic recovery.

Finance Secretary Ajay Bhushan Pandey stated in an interview dated 4th January 2021 with The Economic Times that the government has brought in changes at the systemic level which attributes to the increased revenue collections. One of the measures was the introduction of Aadhar-based GST registration and verification. Next up was the clarity given to taxpayers about the amount of eligible input tax credit they could directly claim from GSTR-2B. 

He further referred to the declaration of GST details in income tax returns as a fuel to make use of data analytics even better and organised way. The last of the factors referred to by him was the implementation of the e-invoicing system. 

These will cumulatively lead to an improved compliance environment. In turn, with higher economic activity in the coming months, it will ultimately lead to a better GST revenue position.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in