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Tax collection sees improvement after e-Way Bill implementation

tax collection sees improvement after e-way bill implementation

The tax collected by the government for the month of April has been calculated to be Rs 94,016 crore. This is a 4.5% hike in comparison to the monthly average of the revenue collected in the last fiscal year. This spike in revenue has been, in part, due to the introduction of the e Way Bill system which has led to increased compliance and is believed to be an effective anti-evasion measure.

Still behind target
However, this collection still fell short of the Centre’s budget target for central GST revenue. The trend CGST revenue for 2018-19 is viewed to be SGST collections plus half the integrated GST or IGST pool. This is because the CGST and State GST(SGST) revenue is deemed to be approximately equal in the absence of the transitional credit that hit CGST collections until late last year. For April, the CGST collected was Rs 28,797 crore. However, if we assume that half of the balance IGST collected for the month also goes to the Centre, the CGST collection for the month may go up to Rs 40,800 crore.

Even this collected amount is about one-fifth short of the budget estimate for CGST of Rs 50,325 crore per month. In the case of SGST, Rs 34,020 crore was collected in April and this amount is still short of the target. However, the states’ earnings are protected via a compensation mechanism that assures a 14% annual growth. In what is clearly a good sign, the compliance related to filing summary returns have expanded to 72% of the eligible taxpayers till the 31st of May, increasing from 63% and 69% respectively for February and March.

Impact of the Electronic Way Bill
The e-Way Bill has been introduced in phases for the movement of goods from the 1st of April. The Digital e Way Bill makes it mandatory for businesses to inform the GST Network portal about the origin, destination and vehicle details concerning the movement of goods. Finance Secretary, Hasmukh Adhia tweeted,

 “(The higher than average mop-up) reflects better compliance after introduction of e-way bills.”
The government said,

“Though current month’s revenue collection is less compared to last month’s revenue, still the gross revenue collection in the month of May (Rs 94,016 crore) is much higher than the monthly average of GST collection in the last financial year (Rs 89,885 crore).” According to the government, the GST collections of Rs 1.03 lakh crore for the month of March was due to the year-end effect.

According to Abhishek Jain, tax partner, EY India,

“Introduction of e-way bills could be one possible reason for the increased revenue collection for April vis-a-vis the average monthly collection of around Rs 90,000 crore last year. With introduction of other anti-evasion measures like intrastate credit matching, e way bills, TDS/TCS, etc., these collections may further increase in the coming months.”

The partner and leader of indirect tax, PwC India, Pratik Jain said,

“While this is encouraging, perhaps the government expected a higher collection due to introduction of e-way bills from April 1. Now that intrastate e way bill system has also been introduced in most states, one could expect some incremental impact on revenues in next couple of months. The government would hope the monthly average collection to touch Rs 1 lakh crore soon.”

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