GST collections for January 2021: What does it mean for the coming months?

For January 2021, the Goods and Services Tax (GST) collections touched a new high of almost Rs.1.2 lakh crore. The levels suggest a sharp post-lockdown recovery and improved compliance, reflected through the record number of returns filed of about 90 lakh.

As per the press release by the Ministry of Finance (MoF), dated 31st January 2021, the total monthly GST collections till 6 p.m. of 31st January 2021 is Rs.1,19,847 crore. The total amount collected towards CGST is Rs.21,923 crore while SGST stands at Rs.29,014 crore. The IGST is Rs.60,288 crore whereas the cess is valued at Rs.8,622 crore.

As a regular settlement, the government has paid out Rs.24,531 crore towards CGST and Rs.19,371 crore towards SGST, out of the IGST collected. After that, the final revenue to the Central Government’s coffers and the state governments, respectively stand at Rs.46,454 crore for CGST and Rs.48,385 crore for SGST.

The recovery trend in GST revenues has been on the forward path since the last five months. The revenue collection for January 2021 has increased by 8% MoM basis. The GST revenue collected for December 2020 was about Rs.1,15,174 crore, being the highest since GST implementation until then.

Revenues from imports of goods were 16% higher during the month, and revenues from domestic transactions (inclusive of imports of services) have increased by 6% compared to January 2020. In the second half of the FY 2020-21, the average YoY growth in GST revenue has turned positive at 8% compared to (-) 24% during the first half.

Clear signs of a rapid post-pandemic economic recovery are seen with the steep rise in the monthly GST revenue over this time. The press release stated that several factors contributed to the rise. These include closer surveillance against fake-billing, deep-data analytics using data from various sources, including GST, income tax and customs IT systems, and efficient tax administration.

Since November 2020, 2,700 cases have been lodged against 8,500 fake entities, and over 274 people have been arrested. The data-driven initiative has helped the department to collect Rs.858 crore from these entities.

The coming months will have revenue collections at higher levels, with the GSTR-9 deadline for FY 2019-20 on 28th February 2021 and the financial year coming to a close. In the long run, the outcome of Union Budget 2021 looks promising to fuel the consumption levels from the FY 2021-22 onwards.

GST implementation is also set to get a significant facelift with the interlinking of the GST return filing, the importance of reconciliation, simplification of compliance for MSMEs, etc. Filing is expected to become a lot easier without technical hassles since several deadlines are already distributed across the month. Further, the introduction of the Quarterly Return filing and Monthly Payment of taxes (QRMP) scheme will ensure easier compliance for the MSMEs.

The focus of the department will now shift towards assessments and audits. Mostly, the regular taxpayers will be under the scanner. Businesses must therefore make sure to avoid differences between GSTR-1 and GSTR-3B every time. They should also keep a regular check on the input tax credit claimed in GSTR-3B, not being more than 105% of eligible credits available in GSTR-2B. 

Not to forget that the Union Budget 2021 has done away with the tax professionals’ GST audit requirement. It means that the government, the CBIC, and the GST Network are prepping up their respective systems for arranging a smooth online verification and validation of the GST return data. Data-sharing across tax departments will become more prevalent.

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