NEW DELHI: As economic slowdown continues to rile the country’s economy, Goods and Services Tax collections, which have been on a downward spiral, dropped sharply in September to Rs 91,916 crore from Rs 98,202 crore collected in August to hit a 19-month low.
This comes at a time when there are concerns about the health of India’s banking sector in the wake of a probe into the state of affairs at Punjab & Maharashtra Cooperative Bank.
Questions have been raised about the role of auditors and even the RBI after stunning disclosures of crony lending by the bank and window dressing of accounts rocked the markets.
To add to the worries of the financial markets, a study by Crisil Ratings released on Tuesday showed the value of debt whose ratings have been downgraded, has more than trebled to Rs 1.38 lakh crore in the first six months of FY20 from Rs 39,000 crore in the corresponding year-ago period.
The fall in the GST collections is a matter of concern not only because this is the lowest in one-and-a-half years but also because it is significantly lower compared to September last year. GST mop-up stood at Rs 94,442 crore in September 2018.
“Obviously, these figures are a strong indicator that the supply of goods and services has come down considerably,” said Sumit Dutt Majumder, former chairman of the Central Board of Excise and Customs.
A 2.67% drop in GST collections may not mean a similar contraction of GDP as the tax collection figures do not capture all sectors of the economy. Analysts, however, say it does not bode well for the overall GDP growth. The figures also showed a slowing economy. During April-September, GST mop-up was Rs 6.06 lakh crore compared to `5.78 lakh crore in the same period a year ago.
“It’s a double jeopardy for the Centre as the state’s share of GST will fall below what has been promised and the Centre will have to compensate them for losses,” Majumder added.
Gross GST collections for September comprised Rs 16,630 crore through Central-GST and Rs 22,598 crore in State-GST. Out of the Rs 45,069 crore, which was collected as Integrated-GST, Rs 21,131 crore has gone to CGST and Rs 15,121 crore to SGST as regular settlement.
DISTRESS SIGNALS
GST collections dropped to Rs91,916 crore in Sept from Rs 98,202 crore in Aug The last time GST mop-up was so bad was in January 2018, at Rs 89,825 crore.
Bank stocks lost heavily on both the Sensex and Nifty indices due to concerns overstress in the financial system.
Credit quality pressures intensified for India Inc in the first half of FY20, according to Crisil Ratings.
Value of debt downgraded jumped to Rs 1.38 lakh crore in the first half of FY20 from Rs 39,000 cr a year ago.