The state’s goods and services tax (SGST) collections have revived during the festival season.
Maharashtra received Rs 4,768 crore by October 27, which is 4.24% higher than in the corresponding month in 2019. Indeed, this is the first month during the pandemic when the SGST collections are higher over the year-ago period.
The figure is also Rs 388 crore higher than in September when state collections were Rs 4,380 crore, data from the GST department shows. This tax is the main revenue earner for the state government. And Maharashtra earns the highest revenue among states.
Since GST is a consumption-based tax, it reflects purchasing power in the economy. Officials say rise in GST receipts is likely to continue through Diwali but caution that it may not last given the spike in unemployment owing to the pandemic. “The rise in GST receipts reflects the release of pent-up demand which we also saw in June when the lockdown started opening. But given the high unemployment rate and low purchasing power, the trend is unlikely to continue,” said a senior official.
The state’s GST collections are still 26.5% lower in the 7-month span of April to October over the corresponding 2019 period. In 2020, the state has collected Rs 25,245 crore as against Rs 34,371 crore in this period last year, a gap of Rs 9,126 crore.
Overall GST kitty till Oct still 32% lower y-o-y
There is also a 32% gap in total GST collections (including State GST, VAT, IGST and Profession Tax) between April-October 2019 and 2020, a difference of Rs 23,285 crore in collections.
Data shows GST collections were lowest in April and May at the height of the lockdown. The collections were 81.3% lower than in 2019 during April and 47.6% lower in May. Collections revived with easing of the lockdown in June but dipped once again in July and August.
Officials also say that gap in total GST collections would be higher if collections in October 2019 were not on the low side. A drive by the government resulted in higher filing by traders post-October in 2019. Last year, average monthly GST collection was Rs 5,190 crore.
A presentation by the state finance department to the state cabinet a few weeks ago had highlighted concerns about poor GST collections. “The contraction in GST collections reflects the weakness in Maharashtra’s economy,” the presentation pointed out. Unemployment and job losses would be major hindrances in the revival of the economy, it said.