FY19 closes on a happy note with record GST collections at Rs 1.06 trillion

The financial year 2018-19 (FY19) ended on a happy note on the goods and services tax (GST) front. At Rs 1.06 trillion, the government has announced the highest monthly collection from GST in March since its roll-out 21 months ago. This is the fourth time in FY19 that the monthly GST collection has crossed the Rs 1-trillion mark, meeting the target. With this, the total GST collected during the year has touched Rs 11.77 trillion, still nearly Rs 75,000 crore short of the initial annual expectation.

Even so, the GST mop-up, together with the direct tax collection of Rs 11.5 trillion (against a Budget target of Rs 12 trillion), may somewhat ease the government’s worry about a steep tax shortfall for now. Analysts said the latest numbers would help the government move closer to the fiscal deficit target of 3.4 per cent of the country’s gross domestic product (GDP) set for FY19. “The monthly average of GST revenue during FY19 is Rs 98,114 crore, which is 9.2 per cent higher than 2017-18. These figures indicate that the revenue growth has been picking up in recent months, despite various rate rationalisation measures,” the finance ministry said in a statement on Monday.

The total GST collections in March were up 16 per cent from the corresponding period last year. Of that, the central GST (CGST) stood at Rs 20,353 crore, while state GST (SGST), and integrated GST (IGST) were pegged at Rs 27,520 crore and Rs 50,418 crore, respectively. The collection from cess was Rs 8,286 crore. chart “The major reasons for the growth could be reconciliations by businesses of outward and inward supplies, intelligent data analytics, related tax leakage detections, and consequent GST payment by businesses,” said Abhishek Jain, tax partner, EY.

The CGST for the financial year adds up to Rs 4.6 trillion, against the revised target of Rs 5.04 trillion, leading to a shortfall of nearly Rs 45,000 crore. However, the amount collected as GST compensation cess which is left unutilised and is yet to be distributed to states is likely to be adequate enough to meet the shortfall, finance ministry officials said. This amount, they said, has helped the central government meet its revised GST target. The compensation cess is distributed among the states every two months, beginning May. The unutilised cess stands at around Rs 40,000 crore for the fiscal, and is likely to be accounted in the Centre’s books for now, only to be shared with states later.

The Interim Budget had earmarked Rs 51,735 crore for the compensation cess fund. Adding Rs 15,000 crore accrued from the previous fiscal year, the transfer to states translates to Rs 66,735 crore in FY19. That leaves a balance of Rs 38,625 crore in the cess account, according to this calculation. The government amended the GST Act last fiscal, allowing 50 per cent of the unutilised compensation amount to be transferred to the consolidated fund at any time in any year till the end of the five-year period, when the fund lapses. “The GST collection figure looks optimistic but there are reports that payments have been made in cash without utilising credits and this could be one important factor. An analysis of the pending refunds should be done to highlight the overall number. Notwithstanding this, the number looks good due to better compliance and various quarterly tax payments”, said Abhishek A Rastogi, partner at Khaitan & Co. The GST Council in December decided to cut tax rates on 23 goods and services, including movie tickets, television and monitor screens, and power banks, besides exempting frozen and preserved vegetables from the indirect tax.

The government is targeting a CGST collection of Rs 6.1 trillion in FY20, a 21 per cent increase over the revised target of FY19. “Achieving this steep target would call for substantial increase in tax base by plugging the existing leakages, as room for increase in tax rate seems limited,” said Pratik Jain, partner and leader indirect tax, PwC India. Devendra Kumar Pant, chief economist, India Ratings & Research, concurred that unless the pace of growth of GST collections as observed in 3QFY19 and 4QFY19 is sustained and accelerated, it would be difficult to achieve FY20 budgeted GST collections.

The Business Standard, 2nd April 2019

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said. Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm

Credit card spending growth declines on RBI gaze, stress build-up

Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem. “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and

CA Online

Search This Blog