GST Collection

"Coupled with economic recovery, anti-evasion activities, especially action against fake billers have been contributing to the enhanced GST. The improvement in revenue has also been due to various rate rationalisation measures undertaken by the Council to correct inverted duty structure," the ministry said.

This statement is made by the finance ministry in the month of December 2021 amid strong GST revenue collection in the financial Year 2021-2022.There are many reasons for such hefty GST collection but before looking into reasons first look at soe data.

Table showing monthly GST collection and its comparison.

Month	FY 2020-21 (Rs. in Cr)	FY 2021-22 (Rs. in Cr)	Increase	% Increase
April	32,172.00	1,39,708.00	1,07,536.00	334
May	62,151.00	1,02,709.00	40,558.00	65
June	90,918.00	92,849.00	1,931.00	2
July	87,422.00	1,16,393.00	28,971.00	33
August	86,449.00	1,12,020.00	25,571.00	30
September	95,480.00	1,17,010.00	21,530.00	23
October	1,05,155.00	1,30,127.00	24,972.00	24
November	1,04,963.00	1,31,526.00	26,563.00	25
December	1,15,174.00	1,29,780.00	14,606.00	13
January	1,19,875.00	1,38,394.00	18,519.00	15
Total	8,99,759.00	12,10,516.00	3,10,757.00	35

 

 
 

Now we shall look into some reasons and insights of this data with prime focus on structural and procedural changes brought in by the GST council in the GST regime so as to facilitates efficient governance of GST Act.

Insights from above data: -

• High growth in the month of April and May 2021 is attributed to low base in the month of April and May 2020 due to nation wide lockdown imposed to curb the outrage of corona virus.
• From the month of June 2021 to January 2022 there is average 21% increase in the GST revenue growth.
• Recovery in National and International economy is contributing to growth in GST collection.
• After festive system in the month of December 2021 and January 2022 the is Revenue growth less than 20%.
• One of the important factors in large GST collection is Systemic changes bought by the government. Below is detailed explanation of such changes: -

1. Aadhar based GST registration: - Government introduced Aadhar based GST registration with the purpose of making the life simpler for the honest taxpayer, and at the same time check the fraudulent elements who used to get registrations and then they used to indulge in fraud.
2. Restriction on Input Tax Credit: - Earlier GST input tax credit was availed by the tax payer on the basis of self-assessment however from December 2020 government has restricted availment and utilisation of input tax credit subject to credit available in GSTR 2B thus only those invoices which are reflecting in GSTR 2A are eligible to be taken as Input tax credit, this step has restricted wrong availment and utilisation of ITC thus results in increased GST collection.
3. E Invoicing: - Earlier e invoicing is required compulsory for business whoseturnover was above 500 croreshowever in the month of October 2020 this limit is reduced to 100 crores, and from the month of April 2022 this limit will further go down to 20 crore. Mandatory e invoicing and its reconciliation with GSTR 1 and e way bill will facilitate reduction in instances where supply of goods or services has undertaken without generation of invoice.
4. Anti-Evasion Measures: - Anti-evasion measurestaken by the government like identifying fake billers and taking necessary steps against them has contributed a lot in increased GST revenue collection. The government has specially targeted the whole ecosystem concerning this fake billing process. However, many honest taxpayers who has made a genuine purchase from this fake biller are also been harassed by the government which is ark side of this anti-evasion measures.

Conclusion: -Strong revenue collection from taxes is important for strong economic growth of the country. Structural changes bought up by the government have contributed positively in GST collection but at the same time lot more changes is required to be done by the government to make GST user friendly. Even today there are many procedures in GST which are hampering the government motto of ease of doing business. Government also must ensure that honest tax payers were not harassed by the departmental authorities.