Good GST Returns, Proactive Fiscal Policy Can Spur Growth: SBI Report

 







Declining second wave of Coronavirus pandemic and improved Goods and Services Tax (GST) collections can enable the Centre to compensate the states, a report by the State Bank of India (SBI) has said, noting that only a third wave could now force the Government to borrow on a larger scale to give compensation to states.

At the same time, the bank's report suggested, “while we do not rule out disruption to Government finances in subsequent months as economic activity only picks up modestly, we believe the space for monetary accommodation is over and only a proactive fiscal policy can rekindle animal spirits and growth.”

The second wave of Covid-19 has been stabilising with declining seven day moving average of daily new cases for the past few days, indicating that the peak of the second wave is mostly behind us. Furthermore, daily recovered cases are now higher than daily new cases and the gap between the two is much higher than what was observed during the first wave peak, the report prepared by the country's biggest lender said.

The other reason to cheer is the GST revenues which have set a new record at ₹ 1.41 lakh crore in April 2021 and ₹ 1.03 lakh crore in May 2021. The average state GST or SGST collection was ₹ 29,137 crore for April-May 2021 period, the report added.

It noted that the average integrated GST or IGST collection was ₹ 60,840 crore.

"Ideally 50 per cent of this should be provided to states. The monthly average cess collection was ₹ 9,355 crore. Thus, if we combine all these figures, the average monthly revenue for states would be ₹ 68,912 crore for this year," SBI said in its report.

"If we calculate the yearly figure on this number, then the overall revenue would be ₹ 8.27 lakh crore. We collected the data for almost all states and found that the combined budgeted SGST and cess estimates were ₹ 7.67 lakh crore," it underlined.

Therefore the SBI report noted that if the positive trend in GST continues then providing states their due might not be a significant challenge for the Centre. Only a third wave could now force the Centre to borrow on a larger scale to compensate the states, it said.

The SBI further stated that the extension of Pradhan Mantri Garib Kalyan Anna Yojana from July till the end of November 2021 is expected to cost ₹ 91,000 crore, while vaccinating 75 per cent of people above the age of 18 years is expected lead to an additional burden of ₹ 13,851 crore.

“However, this number could go up if India enters into vaccine purchase agreements with foreign companies. For now we have assumed ₹ 400 per dose as the vaccination cost,” it said.

The Centre has again been cautious in budgeting its excise revenue at ₹ 3.35 lakh crore. However, if it continues to levy the same taxes as of now based on our assumptions of petrol and diesel consumption, the excise revenue could increase by ₹ 76,339 crore from the budgeted estimates.


“Thus overall the Government's finances do not look overstretched as GST collections have continued to maintain pace because of persistent Government efforts in plugging the loopholes and Government had already factored in some of the vaccination cost. We expect a fiscal impact of around ₹ 28,512 crore currently because of all these measures,” the report concluded.




Join Our Telegram Channel for more updates:https://t.me/praveengst

Comments

Post a Comment

Popular posts from this blog

Centre appeals against ruling on levy of GST on maintenance charges to resident welfare associations

Image
  The Centre has preferred a writ appeal before the Madras High Court against a single judge's order that flat or villa owners paying more than ₹7,500 a month towards maintenance charges to their residents’ welfare associations must pay Goods and Services Tax (GST) at the rate of 18% only for the amount exceeding ₹7,500 and not for the entire monthly contribution. Justices T.S. Sivagnanam and Sathi Kumar Sukumara Kurup on Wednesday allowed an application filed by the Centre to dispense with production of a certified copy of the judgment passed by Justice Anita Sumanth recently and directed the Registry to list the appeal for admission in the usual course. Justice Sumanth had in July this year quashed an order passed by the Authority for Advance Ruling (AAR) on June 21, 2019 as well as a consequent circular issued by the Department of Revenue under the Union Finance Ministry on July 22, 2019 since both of them had insisted upon collecting GST for entire monthly contribution. The jud...
Read more

Seven key things to know before filing income tax return (ITR) for FY21

Image
  The last date to file income tax return for the financial year 2020-21 has been extended to September 30, 2021. Although there is more than two months left for the deadline to end, it is always recommended to complete the task as soon as possible and not to wait for the last minute. Worth mentioning here is that the income tax department last month launched a new e-filing portal (www.incometax.gov.in) to speed up the processing of tax returns. The I-T department will soon launch a mobile application, having all the features of the new portal. This year taxpayers have to take care of the following changes in the ITR filing process. 1) A new utility named JSON has been launched for filing tax return forms for FY21. At present, only three forms, ITR 1, 2 and 4 have been released. These new forms will import pre-fill data such as personal details, salary income, dividend income, interest income, capital gains and all the information available in Form 26AS. 2) Taxpayers will have the ...
Read more

Income Tax Dept detects ₹350 cr unaccounted cash receipts after raid in Rajkot

Image
  The Income Tax Department carried out a search and seizure operation on a real estate group based in Gujarat's Rajkot and found unaccounted cash receipts in various projects of approximately ₹350 crore, the Finance Ministry said on Friday. The group is among Gujarat’s prominent real estate builders and developers and is actively engaged in real estate, construction and land trading businesses in and around Rajkot. More than 40 premises were covered in the search operation. During the course of operation, many incriminating documents and digital evidences were seized indicating involvement of the group in unaccounted transactions. The IT sleuths found substantial evidence of transactions outside the regular books of accounts, unaccounted cash expenses, cash advances received and interest paid in cash. Evidence of on-money payments in real estate projects-flats, shops and land deals has also been found. Total unaccounted cash receipts in various projects of approximately ₹350 crore...
Read more