Unfair to blame GST for revenue woes, says CBIC chairman

At the time of introduction of GST in July 2017, the constitutional amendment provided for compensation to states for five years for revenue lost. This compensation came to an end in June 2022.

It would be unfair to blame the Goods and Services Tax (GST) system for the government’s revenue woes as extraneous factors had hit collections, according to the chairman of India’s Central Board of Indirect Taxes & Customs.

“A lot of concern is expressed often about the poor revenue collections from GST and it is said that 14 percent rate of growth which was assured to the states was not actually achieved during this period,” Vivek Johri said on July 7 at an event by PHD Chamber of Commerce and Industry. “But I think it is unfair to blame GST for some extraneous factors like how the economy was behaving with global economic scene, Covid-19 pandemic and all of that, and blame it on GST as a tax system and say that it has not yielded the kind of revenues it has.”

A working paper by National Institute of Public Finance and Policy, released July 5, had said that the Centre and states have yet to reap the benefit of the GST regime, which in June completed five years of implementation.

However, India is on the right track on GST, CBIC’s Johri said on July 7, adding that the business processes and IT systems have stabilized and so have the revenue collections.

GST collections continue to grow at a fast clip and “we have consistently had revenue collections exceeding a threshold which wasn’t event been talked about only two years ago,” he said.

GST compensation to states ended June 30 this year. Although a dozen states have asked the compensation be extended given the fiscal stress they are likely to face, there is no decision on the issue yet.

Gross GST collections rose 56 percent on year to Rs 1.45 lakh crore in June, the second-highest monthly total.

Finance Minister Nirmala Sitharaman has said that Rs 1.40 lakh crore seems to be the rough bottom line for GST collections.

The GST Council will meet next in the first week of August.

Vivek Johri, speaking on July 7, said that quarterly return and quarterly payments for GST could happen sometime in the future, and the could also be auto-populated.