Govt sees GST slump due to pandemic, May collections likely to drop 30% vs April

 







The second covid-19 wave ravaging the Indian economy is set to have an impact on the central government's revenue collections as well. Sources tell ET Now that GST collections for the month of May and June are likely to be severely impacted due to the lockdown imposed by several states to contain the spread of the virus.

The Goods and Services Tax collections are likely to see a 30% month-on-month dip in May vis-a-vis record collections in April. The GST collections in April touched a record high of over Rs 1.41 lakh crore. While the GST collections in June are expected to fall below Rs 1 lakh crore for the first time in three quarters.

Lockdowns of varying degrees in almost two-thirds of the country have to lead to weak manufacturing activity and many production plants of automobile, auto parts and electronics have temporarily shut down.

“There’s a lockdown in several states leading to a hit in GST collections in May and June. We may just about touch Rs 1 lakh crore in May but in June we may see a big dip,” a source told ET Now.

ET Now learns that the daily e-way bills generation has also dropped indicating a weakness in economic activity but the government expects revival by July or September with the second wave ebbing.

Demand has fallen sharply. During the first wave, we saw supply constraints but this time, demand has been hit due to the resurgence of the virus. We have seen the cases come down in Maharashtra, Delhi already, big states like Tamil Nadu, Karnataka, and Kerala will peak soon.. so by July or September we will see some revival,” the source added.

India’s central bank had also said that the biggest toll of the second covid wave was in terms of a demand shock—loss of mobility, lower discretionary spending and unemployment, besides inventory accumulation, though aggregate supply was less impacted.

Experts argue that the second wave and an impending third wave could add to challenges for the central government. A delayed timeline for privatisation along with revenue shortfall risks the budget math going awry.



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