The risk of reduction in GST revenue collection for March and April has now deepened, owing to Corona. Currently, financial experts are unable to estimate to what extent the GST collection might drop because of Corona. However, it is being anticipated that the effect of Corona will have its impact on revenue collection not only in the current financial year but also during the next fiscal year (2020-2021).
Sectors such as food, travel, and hotel might be witnessing a sharp decline in business as there has been a significant decline in demand and hence the output. Hotels, trade, broadcasting, transportation, and communication sectors were anticipating to generate Rs 33 lakh crore worth of services in the current financial year. This number may be revised downward, affecting collections from this section of GST.
Exports of commodities from India are anticipated to decline in the current financial year by at least $10 billion. The collection of GST is likely to increase only when the items are sold, and consumers start resuming to use various services. Also, Corona’s impact is noticeable on areas such as hotels, restaurants, and tourism, which will bring down the revenue collection from the service sector.
Also Read: GST Collection for February Stands at Rs 1,05,366 Crore
India earns around $30 billion from international visitors (about Rs 2.1 lakh crore). The tax incident is compounded by the 15 April ban on the arrival of foreign visitors and the growing frequency of cancellations over the next few months. Imports will decrease as China’s supply chains are affected. This will also pull down the collection of GST taxes as imports are taxed as IGST. In February, IGST declined by 2% due to reduced imports.
The current variations across several sectors will have an immediate effect on the GST revenue collection in the current financial year. At the same time, officials from the Finance Ministry expect the impact of Coronavirus to be noticeable only in the next fiscal year. The government had a target of collecting Rs 1.25 lakh crore via GST in March; however, it seems unlikely now. The monthly GST collection in February was Rs 1.06 lakh crore against Rs 1.10 lakh crore, which was the target set by the revenue department.
According to the revised budget estimate by the Central Government, the GST revenues are expected to be Rs 6.12 lakh crore in the current financial year. The collection has been around Rs 5 lakh crore until January.
For any clarifications/feedback on the topic, please contact the writer at firstname.lastname@example.org
Bhavana is a Senior Content Writer handling the GST vertical. She is committed, professional, and has a flair for writing. When away from work, she enjoys watching movies and playing with her son. One thing she can’t resist is SHOPPING! Her favourite quote is: “Luck is what happens when preparation meets opportunity”.