The Central Government is headed for a huge shortfall in tax collections, with the gap in GST collections alone likely to be nearly Rs 1 lakh crore for the entire fiscal year.
Top revenue officials pointed out that there was already a shortfall of Rs 1.4 lakh crore in total GST collections which includes Central, State, and Integrated GST during the first six months of the year.
The shortfall in the Centre’s share is estimated to be over Rs 55,000 crore.
“Though we have collected Rs 1.05 lakh crore as GST in October and, according to trends, November too will top Rs 1 lakh crore, the fact is that there are indications that collections will start tapering out in December and we can expect shortfalls in the last quarter of the year,” an official said.
“Actually, the monthly target of collecting Rs 1 lakh crore as GST has remained constant since GST was launched in 2017. Even if we take inflation into account, we should be collecting far more every month, but obviously that is not happening,” said Sumit Dutt Majumder, former chairman of the Central Board of Excise and Customs.
As for overall tax collections, which include direct taxes such as corporate and income tax as well excise and customs duties, net collections stood at Rs 4.58 lakh crore during the first six months of the fiscal year or 28 percent of the budget estimate for the full year.
Corporate tax collections were nearly 40 percent lower than last year’s level s while income tax inflows stood nearly 22 percent lower.
Government officials feel that with industrial growth likely to shrink in single or double digits for the full financial year, there would be “an at least 15-20 percent decline in direct taxes compared to last year, or nearly Rs 2 lakh crore.”
There is however hope that excise collections, especially on auto-fuels, will yield a cushion against shortfalls elsewhere since the Government has kept raising taxes on diesel and petrol since the lockdown began in March.
“However the scope of increasing duties on auto-fuels is now limited as crude prices are going up and as the world opens up more economic activities,” an official said.