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Data: Compared to 2019, GST Collection fell by more than 25% during March to June 2020 in 27 States/UTs

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COVID-19’s impact on economy is now well known. GST collection numbers from March to June 2020 clearly demonstrate the impact of lockdown. In 27 States/UTs, the GST collection between March & June 2020 fell by more than 25% compared to 2019. Here is a detailed data story on COVID-19’s impact on GST collection across the country between March & June 2020. 

As per a Press Release dated 01 August 2020, the gross GST revenue collected for July 2020 was ₹ 87.4 thousand crores. This is 86% of the GST revenue collected during the same month last year. 

The second phase of India’s attempt to come out of COVID-19 induced National Lockdown i.e. Unlock 2.0, was effective from 01 July 2020. Unlock 2.0 opened up more economic and business activities in continuation to Unlock 1.0 which was effective from 01 June 2020

However, the gross GST collection for July’2020 was less than that of June’2020, where in it was ₹ 90.9 thousand crores. Government attributes the higher GST collection in June to the arrears from the previous months (Feb-May’20) which are paid in June’ 20, in view of the extension provided due to COVID-19. 

In spite of the collection of arrears, the GST collection for June’2020 was 9% less than that of June’2019. In this story, we do a detailed comparison of GST revenues collected during and in the aftermath of Lockdown, with the same period last year, along with analysing how different States fared in terms of GST revenue collection during this period, compared to the last year. 

Gross GST Collection during 1st Quarter FY 2020-21 is 58% of the collection in 2019-20

The Nation-wide Lockdown was announced on 24 March’2020, which was extended further, and the Unlock process started from 01 June 2020.  As per the information available on the official GST Portal,  the Gross GST Collection  i.e. CGST, SGST, IGST (inclusive of GST on Import of Goods) & Cess, for March’20 was ₹ 96.7 thousand crores. This is around 8.5% less than that of March’2019, where in it was ₹1.05 lakh crores. 

Lack of Economic activity during the ensuing months had a severe impact of the GST collection. The collection fell by 72% in April’2020 compared to the same month in 2019. In the previous year ₹ 1.12 lakh crores were collected in April, while it was only ₹ 31.6 thousand crores in the current year.  The month of May’2020 recorded a slight improvement compared to previous month.  However, the collections in May were only around 60% of Gross GST collected during the same month the previous year. 

As part of the relief measures, Government of India extended the due dates for GST payments of earlier months to June’2020. With the first phase of Unlock being implemented and the arrears being paid, GST collection for June’2020 increased to ₹ 90.3 thousand crores. In-spite of this, the gross collection was around 9% less than that of June’2019. 

Overall, during the first quarter of FY 2020-21, the gross GST collected was ₹ 1.83 lakh crores. This is nearly 41% less than the collection of Q1 of 2019-20, during which the Gross GST collection was ₹ 3.11 lakh crores. 

Gross GST Collection of 27 States/UTs fell by more than a quarter during March-June 2020, compared to 2019

While the numbers at the national levels indicate a major fall in GST collection during the first quarter of 2019-20, it is not even across the states, with few states performing better while others recording a major dent in their GST collection compared to that of last year.  

We take a look at the Gross GST collection for each of the States for the four-month period March-June’2020. Only 4 States/UTs have managed record an increase in Gross GST collection equal to or more than 2019, with only 4 other states recording a less than 25% reduction compared to last year.  

In the rest of 27 States/UTs, Gross GST Collection fell by more than 25% in the March-June’2020 period compared to 2019. 

No major fall in GST collection of few of the smaller States /UTs

Gross GST collection of Lakshadweep and Tripura for period March-June’2020 was higher than the collection during same period in 2019. 

GST collection in Tripura increased from ₹ 233 Crores in 2019 to ₹ 246 crores in 2020, during this period. The shortfall in the month of April 2020 was compensated with an increase in collection in May 2020, when ₹ 95 crores were collected compared to that of ₹ 50 crores in May 2019. There was also a slight comparative increase in June’2020 compared to June 2019. 

Sikkim has comparatively higher GST collection among the smaller states and it managed an on-par GST Collection between March-June’2020 compared to the same period in 2019. The higher collection in June 2020 compensated for the lower collection in earlier months of 2020.  

Most of the North-Eastern states have recorded a smaller number of COVID-19 cases. Hence, in-spite of being impacted by Nation-wide lockdown, these states have managed to go back to normal GST collection once the Unlock began. 

Chhattisgarh, Bihar, Telangana & Andhra Pradesh managed to keep the fall to less than 30%

GST collection in most of the larger states was impacted during the lockdown months i.e. April & May’ 2020, especially the collections being very low during April’2020. However, few of these larger states have managed to recover the GST losses once the lockdown regulations were eased during June’2020. Chhattisgarh, Bihar, Andhra Pradesh, Telangana, Madhya Pradesh, Assam, Karnataka and Odisha are among such states that have managed to keep the fall in GST collections during March-June 2020 to less than 30% of the collection during 2019. 

A common feature of these states is the comparatively a smaller number of COVID-19 cases during March-June’2020 period. Telangana was among the first states which has imposed lockdown measures, even prior to Nationwide lockdown. This is evident in the major short fall of GST collection in April’2020 with only ₹ 928 crores collected as against ₹ 3510 crores collected in April’ 2019. The collection for May’2020 was also correspondingly lower than last year. However, once the lockdown was eased in June’2020, GST collection increased to ₹ 3276 crores, which is slightly more than ₹ 3166 crores in June 2019. 

Karnataka, which is among the largest GST collecting states also experienced a major shortfall in April’2020 with just over ₹ 2 thousand crores collected compared to more than ₹ 8 thousand crores in April’2019. This shortfall was recouped to an extent with an increased GST collection in June’2020 with ₹ 6.7 thousand crores, a marginal increase over last year. 

Andhra Pradesh, Madhya Pradesh, Chhattisgarh, Bihar, Odisha are among the states which have managed to cover up for the shortfall of GST collection during April’2020 with an increased collection in June’2020. These states were among the first states to back to normalcy post the lockdown. However, a recent increase in the number of cases in some of these states could have an impact on future GST collections. 

GST collection during March-June’2020 in majority of States is less that 70% of last year 

GST collection in around 21 States/UTs during March-June 2020 is less than 70% of the collection last year. Of these,  13 States/UTs have managed to keep their GST collection between 60-70% of the collection in 2019. 

Most of these states are also among the worst COVID-19 affected states and have imposed lockdowns at different times in addition to the Nation-wide lockdown. 

Kerala is one of the states which has imposed stringent lockdown measures. It is reflected in its overall GST collection during March-April’20 which is only 64% of the collection in 2019. Although like most other states, it managed to have June’20 GST collection at par with last year, the corresponding month-on month deficit in March & April’20 has been greater. 

Maharashtra has the highest number of COVID-19 cases with its key cities among the larger COVID-19 positive clusters. Its April’20 GST collection was less than a quarter of the collection last year. However, in-spite of extended lockdowns in some areas, the GST collection in June’20 is at par with the collection in 2019. As highlighted earlier, the collection in June 2020 includes arrears from previous months. 

Tamil Nadu, Rajasthan & Delhi are among the early states to have recorded a higher number of COVID-19 cases. This is also reflected in their GST collection during March-June 2020. Gujarat, UP & West Bengal also display a similar trend with GST collections improving in June’2020 but not enough to coverup for the shortfall of previous months. 

Less than 60% GST Collection in Jharkhand, Himachal & Uttarakhand compared to 2019

GST collection of Jharkhand was severely affected during lockdown, with the GST collection for April’2020 being less than 9% of the collection during the same month last year. Although there is an increase in the GST collection in May & June’2020, it is still lower than that of same months in 2019. 

Uttarakhand also presents a similar case, with shortfall of GST collection even in May & June’2020. Being a tourism reliant state could be one of the reasons for this shortfall even post lockdown. Himachal Pradesh and J&K are among the lower GST collecting states with the impact of April’20 continuing even in subsequent months. 

Increasing number of COVID-19 cases could severely impact future GST collections in many States

Data from multiple states indicates a strong correlation between the lockdown and GST collection, with nearly all the states recording a slump in the GST collection during April’2020. The degree of fall in the collection varies from state to state as per the official data. 

GST collection in May 2020 has seen a slight improvement compared to April, though the collections were way below the 2019 levels. Post the easing of lockdown regulations and the extension of timeline to pay the arrears, an increase in GST collection is seen in most of the states in June 2020. Some of the states have been more proactive in lifting the lockdown measures while few others like Maharashtra continue to have a large number of containment zones affecting the regular economic activity.  

As seen in the case of Telangana, Karnataka & Tamil Nadu, attempt to resume normal business has resulted in a corresponding increase in the number of COVID-19 cases, with few of these states resorting to lockdown and containment measures once again. In some ways, this is a catch-22 situation for governments as resumption of normal business is leading to increased COVID-19 cases which would in turn force governments to impose lockdown measures. 

Though the national level GST numbers for June 2020 indicated some semblance of recovery, the collection for July 2020 fell by close to 15% compared to 2019. This fall coincided with the huge increase in COVID-19 cases in July 2020. Currently,  more than 50 thousand new cases are being reported daily. 

All this means a tough choice for the Centre as well as the States between containment of COVID-19 infection and resumption of normal economic activity. Strategies at micro-level appear to be a better way forward which identify and differentiate risk-free zones for business activity and infection-prone areas for containment. 

Featured Image: GST Collection

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