Why sharp rise in GST collections in June doesn’t indicate revival in businesses, economy

The revenues for June are 91 per cent of the GST revenues in the same month last year. 

GST collections in the month of June was Rs 90,717 crore, which is nearly three times the collections in April and significantly higher than the collections in May 2020. However, the collections in June do not give more reasons to cheer as it also includes the returns of February, March, and April, along with some returns of May since the government had allowed time relaxation for filing GST returns, according to a statement by the Ministry of Finance. The gross GST revenue collected in June included CGST of Rs 18,980 crore; SGST of Rs 23,970 crore; IGST of Rs 40,302 crore; and cess of Rs 7,665 crore. The revenues for June are 91 per cent of the GST revenues in the same month last year. 

Due to the economic impact of the coronavirus pandemic and the relaxations given by the government in filing returns and payment of taxes, the revenues during the financial year has been impacted, the government said. In the month of April and May, the government collected GST of Rs 32,294 crore and Rs 62,009 crore respectively. With the June figures, the GST collections for the first quarter of the year is 59 per cent of the revenue collected during the same quarter last year. However, a large number of taxpayers still have time to file their return for the month of May 2020.

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Statewise, Maharashtra, Karnataka, Gujarat, and Uttar Pradesh collected the maximum GST in June. Meanwhile, India’s economic activity is still weak even after the country stepped out of the strict nationwide lockdown and entered Unlock-1 phase. Weak economic activity is keeping the government’s revenue away from the target. In a straight three-month contraction, the manufacturing PMI was 47.2 in the month of June 2020. The fall in the manufacturing activity was primarily driven by sharp contractions in output and new orders, with regional lockdown extensions severely hampering demand conditions, said the IHS Markit report. 

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