The government expects the full impact of the lockdown across states to reflect in tax numbers, especially goods and services tax (GST), in June, although it believes that the impact will be significantly lower than last time when the entire country was shut down.
“The numbers in April have been reasonably okay and May will also not be too bad, but we will see some impact next month,” a senior finance ministry official told TOI.
While the government had managed to rake in a record Rs 1.4 lakh crore from GST in April (based on March sales), the returns for this month, which are being filed, will show the impact to an extent. Further, the first instalment of advance tax (for income and corporate taxes) will be due on June 15 and it will give the government an idea of the overall economic situation in the first quarter.
But before that the GST situation will be assessed by Union finance minister Nirmala Sitharaman when she chairs a meeting of the all-powerful GST Council next week. While some of the states have started demanding compensation for the “loss in revenue”, the forthcoming meeting is expected to focus on the on-ground situation based on feedback from the states.
Based on these inputs an overall assessment will be made. By all accounts, if a shortfall is estimated to be significant, the Centre may once again get the states to borrow from the market and further extend the period of compensation cess, like last year.
“The decision not to impose a national lockdown has been helpful as every state can assess the requirement for itself and decide,” said an official. This is also expected to result in a gradual opening up with states that have fewer cases reducing the restrictions first.
Government sources said the assessment by various ministerial panels had shown that unlike last year, the supply chains were not broken this time and there was greater clarity on what constituted essential and non-essential goods, making the process comparatively smoother. By and large, the price situation is also seen to be under control, the sources added.