New Delhi: Due to recent speculation on the GST collection target for the current and next fiscals as being “overtly aggressive”, state-run State Bank of India on Monday estimated that the GST Revenue in 2018-19 would grow at a rate of 14-16 %, bringing it closer to the decadal growth rate in indirect taxes of just under 14%.
Chief economist Soumya Kanti Ghosh said in a report titled “Arithmetic of GST Collections”, that the speculative collection target pegged at Rs. 7.4 lakh crore is 67% higher than the revised estimates (RE) for the financial year 2017-18.
It is notable that during the current financial year, GST acquisition will be for only 9 months as new indirect tax regime was implemented till July and the fact is that the integrated GST (IGST) is shared equally between the Center and the States. It should be done, the report states that “GST (estimated 9 months) for the financial year (fiscal year 2019) is 15.8%.”
“If we estimate 8 months, the growth rate decreases to 13.5%. Thus, the GST collection growth rate for the financial year 1991 is approximately 14-16%, that is similar to the decadal gross tax revenue growth rate at 13.9%.”
“There have been several speculations in the public domain that the GST collections in current fiscal and budget estimates for FY19 are overtly aggressive, but these are flawed,” Ghosh said.
“The goal of GST is 7.4 million crores, which is 67% more than the FY18 RE. However, under the new rules of GST, the last date for filing GST return is 20th of next month, seven on the last day of the financial year.
“It means that GST will be available only for 9 months during the current year because GST was implemented in July, Hence any analysis needs to take this into account when considering this growth.”
Referring to “wild speculation” in the public domain, that the IGST figures are taken in their entirety without separating the share of the states, Ghosh said: “This is wrong, as the data of GST collections show that gross IGST collections are going to touch around Rs. 4.01 lakh crore in FY18, of which 60 percent have been transferred to states and rest Rs. 1.61 lakh crore is shown in FY18 revised estimates.”
“However, IGST collections of Rs. 4.01 lakh crore should be equally split between the Centre and states. If that happens, then the extra 10% will get transferred to the Centre leading to the upward revision of FY18 estimates,” he added.
SBI said the country’s gross tax revenue is expected to grow by 16.7% in the next fiscal to Rs. 19.1 lakh crore, which estimate is supported by a “10.2% growth in corporation tax and 20.4% rise in personal income tax”.
“It seems that the revenue targets of the government for FY19 are reasonable,” the report concluded.