E-waybills generated by companies in May for interstate commerce were marginally lower than in April, but significantly higher than the month of a year ago, suggesting GST collections in June are likely to be around Rs 1.35 trillion , sources said.
E-waybills totaled 73.62 million in May 2022, the third highest since the system rolled out in 2018 and an 84% year-over-year increase, in part due to a very low base. However, on a monthly basis, e-waybills in May were 2% lower than the previous month.
Collections had reached a record high of Rs 1.68 trillion in April (transactions in March), largely due to an efficient fight against tax evasion, a continued shift from business to the formal sector of the economy and an accumulation of corporate tax payments. at the end of the year.
Monthly gross GST collections moderated to Rs 1.41 trillion in May, reflecting a 4% drop in e-way bills in April.
Continued momentum in GST receipts from July 2021 resulted in an average gross GST mop-up of Rs 1.23 trillion in FY22, up 29% year-on-year. Officials estimate that monthly GST revenue could average Rs 1.35 trillion in FY23, against an average of Rs 1.2 trillion in the budget. Continued growth in GST collections for several months in a row would allay state governments’ concerns about a revenue shock they could face once the five-year revenue protection scheme expires on June 30.
As an incipient rise in consumption has led to a disproportionate increase in GST revenues, a stronger economic recovery could lift collections, demonstrating the high yield productivity of the broad consumption tax. The rise in monthly gross GST collections has given the GST council some breathing room to recalibrate a tax rate action plan as the GST deficit by states won’t be as great after the compensation mechanism ends, officials believe.
Under the GST compensation mechanism, which is constitutionally guaranteed, the states are guaranteed 14% annual revenue growth for the first five years after the tax’s launch in July 2017.