GST collection slips below Rs 1 trillion in March after four months

The numbers pertain to GST paid in February but collected in March, suggesting that collections might turn grimmer going forward.

Goods and services tax (GST) collection fell below the Rs 1-trillion mark in March after a gap of four months, even as disruptions caused by the coronavirus-induced lockdown will get captured only in the coming months. The numbers pertain to GST paid in February but collected in March, suggesting that collections might turn grimmer going forward. The GST mop-up in March stood at Rs 97,597 crore, down 8.4 per cent on a year-on-year basis, the data released by the Ministry of Finance showed on Wednesday. The government had targeted a collection of Rs 1.25 trillion in March. GST collection grew by a meagre 3.7 per cent in the full fiscal year 2019-20.

The dismal collection in March is despite the stringent anti-evasion measures introduced by the government, including the blockage of e-way bill and restricting input tax credit to 10 per cent in the case of failure of invoice uploads by suppliers. Already hit by an economic slowdown, the country went into a 21-day lockdown from March 24 to prevent the spread of Covid-19. All industries that were struggling have become non-operational, which will reflect in the April GST collection figures.Kerala Finance Minister Thomas Isaac told Business Standard that the April numbers, which would essentially be transactions in March would only be about 15-20 per cent of the March figures.

Pratik Jain, partner, PwC India, said, “It seems that many businesses may not have been able to pay GST because of liquidity issues being faced after the lockdown. As the second half of March 2020 has been significantly impacted due to the Covid-19 outbreak, collections in April are likely to be substantially lower.” In a major relief for businesses facing lockdown due to coronavirus, the last date for GST return filing for March, April and May 2020 has been extended to June 30, with no interest, late fee and penalty, for companies with up to Rs 5 crore turnover and subsidised interest of 9 per cent, and no penalty or late fees for bigger companies.

Kerala reconstruction, rehabilitation: State seeks FRBM limit relaxation

Rehabilitation process of the floods, that claimed close to 350 lives, has gathered momentum

Kerala Flood : In order to open more fundraising channels for reconstruction and rehabilitation of its flood-hit areas, Kerala is set to approach the central government to increase its market borrowings limit from 3 per cent of Gross State Domestic Product (GSDP) to 4.5 per cent. The state is already in talks with the World Bank to raise Rs 100-150 billion. This comes at a time when the Centre has declined aid from foreign countries like the United Arab Emirates, which, according to Chief Minister Pinarayi Vijayan, promised “Rs 7 billion”.

If the Centre agrees to relax the Fiscal Responsibility and Budget Management (FRBM) rules for Kerala, its ability to raise money from the markets may increase by around Rs 115 billion. “At present, our FRBM limit is 3 per cent of GSDP, which we are planning to ask the Centre to increase to 4.5 per cent,” said a state official close to the development. However, senior Union finance ministry officials say there are strict parameters for relaxing the FRBM limit, and hence the borrowing and expenditure limits, for a state. 

There are no precedents for relaxing the FRBM limits for any state due to natural disasters.

“The FRBM limits are strictly defined and hence giving a one-time relaxation to Kerala because of the floods is unlikely,” said an official. “The state is free to borrow within its limits, and the central government will release more funds to help rebuild the state after the floods,” the person said.

As far as the central government is concerned, a well laid-down process is followed before deciding the aid to be given to a disaster-affected state, officials say. In case of drought, it is the Union agriculture ministry which takes the lead, and in case of other disasters, it is the Union home ministry.

Read Full Source : BS