GST compensation cess mop-up rises for first time in five months

Goods and services tax (GST) collections slumped to a three-month low in August, and came in 12 per cent lower year-on-year (YoY), indicating slower recovery in economic activity. However, compensation cess collections rose for the first time in five months, and 6 per cent YoY, amid the tussle between the Centre and states. The overall mop-up remained well below the Rs 1-trillion mark for the sixth straight month owing to the pandemic, even as unlocking began in June. GST collections stood at Rs 86,449 crore in August, compared to Rs 87,422 crore in July, according to finance ministry data. It was at 88 per cent of August 2019 collections. A large portion of the fall could be attributed to imports, which were down 23 per cent YoY, while domestic transactions were down just 8 per cent YoY. “During the month, revenues from imports were at 77 per cent and revenues from domestic transactions (including import of services) at 92 per cent of revenues from these sources during the same month last year,” the ministry of finance said in an official release. However, in July, revenues from domestic transactions had touched 96 per cent of last year’s levels, with imports at 84 per cent of the same. “It may be noted that taxpayers with turnover below Rs 5 crore continue to enjoy relaxation in filing of returns till September,” the ministry explained in the release. In order to improve collections, the government is planning more anti-evasion measures, including e-invoicing for large firms with turnover of Rs 500 crore, from October 1. Compensation cess came in at Rs 7,215 crore in August — 5.7 per cent higher than the Rs 6,822 crore in August 2019. The GST Council is expected to meet in a week to discuss the two options on an alternative compensation mechanism proposed by the Centre.

Central GST collections fell to Rs 34,122 crore in August, against Rs 39,467 crore in July. State GST collections stood at Rs 35,714 crore, lower than Rs 40,,256 crore during the previous month. Integrated GST mop-up was also lower at Rs 42,264 crore, compared to Rs 42,592 crore in the previous month. Among large states, a sharp decline in collections was seen in Maharashtra, Karnataka, and Tamil Nadu at 13 per cent, 11 per cent, and 12 per cent, respectively. Delhi saw an 18 per cent fall. However, a marginal rise was recorded in Rajasthan and UP, whereas a slight drop was reported by Haryana and Gujarat. Pratik Jain, partner and leader (indirect tax), PwC India, said it was relevant to note that the percentage drop was higher for smaller states. As things open up gradually, collections are likely to be rise progressively. Abhishek Jain, tax partner at EY, said a significant part of the dip was attributable to imports, which have declined owing to the impact of coronavirus on global trade. M S Mani, partner at Deloitte India, said that in the backdrop of disappointing GDP data for Q1, the GST figures indicate that collections are in recovery mode. “The fact that GST collections on domestic transactions were just 8 per cent lower YoY indicates a revival. The sharp drop of 23 per cent in import GST could be on account of various import-substitution measures. It is expected that collections in the coming months will enable it to reach last year’s levels in a month or two,” he added.

Business Standard, 2nd September 2020

Household debt up, but India still lags emerging-market economies: RBI

Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...

External spillovers likely to hit India's financial system: RBI report

While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...

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