The Goods and Services Tax (GST) collections may come in as a surprise for the government as the collections for July are likely to be lower on year-on-year as well as on month-on-month basis.
The collections are likely to be in the Rs 89,000 crore and Rs 91,000 crore range for the month of July, sources told CNBC-TV18.
Last July, the GST collections stood at over Rs 94,000 crore, while the June collection this year was over Rs 96,000 crore.
Officials said that the collections are likely to slip further for the month of August and September, which will be reported in September and October respectively. However, they are confident that the collections will pick up post September.
There are various reasons for a decline in collection such as "low consumption in the last few days of July as GST rate cut was announced on July 21. Also monsoon is traditionally a season of low sales," officials said. The GST rate cut came into effect from July 27.
About 88 items—from refrigerators and washing machines to toiletries and cosmetics—are set to get cheaper as they were moved from the highest tax bracket of 28 percent to 18 percent. Sanitary napkins were exempt from GST, but their prices may go up as manufacturers will not be able to avail of input tax credit on raw materials.
The deadline to file the GST returns is August 24 and October 5 for the taxpayers in Kerala.
The number of returns, the officials added, were also below the benchmark - around 60 lakh. "Kerala floods have also impacted the collections as the filing has been delayed and a lot of large corporate houses have also reported low sales, a demand slump etc," they said.
When asked experts, they said that India's tax payment system is similar to a credit-card cycle. "It gives you a maximum of 50 days to report a particular supply (say transacted on the first day of the month) and pay taxes by twentieth of a subsequent month. And, the privilege is more for a dealer filing quarterly returns. In such a scenario, it would always be difficult to have indices giving correct reflections on a comparison, more so because of the facility to pay GST and file a return with a late fee and interest for respective compliances," said Anita Rastogi, GST and Indirect Tax Partner at PwC India.
"A few of the delayed GST filings owing to different reasons and external market forces, such as sale and festival seasons, naturally skew the collection numbers. What one really needs to focus on is the annual collection versus the estimated receipt budget, which is set out at Rs 7.34 lakh crore (excluding State GST) by the Central Government for the current financial year," she added.