GST Collections Would Exceed Budget Forecast in FY23; CBIC Chief

The Central Board of Indirect Taxes and Customs (CBIC) chairman Vivek Johri told FE that gross goods and services tax (GST) revenues in FY23 could be Rs 1.3-1.35 trillion per month on average (roughly ’16 trillion for the year), which could mean the Centre’s GST revenues could be Rs 300-550 billion higher than the budget estimate (BE) of Rs 6.6 trillion. Improved compliance and a return in economic activity will help boost collections, he noted. However, he does not expect a significant increase in excise and customs duty receipts this year.

In FY22, the average monthly GST collection was Rs 1.23 trillion.

GST collections of Rs 1.2 trillion per month were factored into the Budget FY23. GST proceeds, net of cess, are split roughly 52:48 between the states and the federal government. After deducting cess collections, monthly average receipts of Rs 1.3-1.35 trillion will result in gross GST revenues (for the Centre and states) of Rs 14.4-14.9 trillion in FY23.

The extra collection indicates that Central GST collections might increase by roughly 20% in FY23, compared to a 12 percent increase anticipated in FY23BE over FY22 actual collections and a 16 percent increase factored in FY22RE.

In FY22, CGST receipts were at Rs 5.9 trillion, up about 30% year on year. CGST-assisted total indirect tax collections are expected to climb by 20% year on year to approximately Rs 12.9 trillion in FY22. Because it only requires 3% year-on-year increase, the FY23 indirect tax receipts target of around Rs 13.3 trillion is within striking distance of the FY22 provisional actuals of Rs 12.9 trillion.

“The resurgence in the domestic economy, including the services sector, which was impacted by Covid, as well as increased compliance, will help keep GST collections buoyant,” Johri added. He stated that April’s high number of e-way bills could result in monthly collections of over Rs 1.5 trillion.

E-way bills, which are used as a proxy for GST collection, totaled Rs 78.16 million in March, the highest monthly figure since the online system went live on April 1, 2018.

Customs and excise duty collections, on the other hand, will be more difficult due to the reduction in levies on several commodities, according to the CBEC chairman. To offset the impact of rising commodity prices, customs charges on edible oils, some legumes, and cotton (on Thursday) were recently reduced. In November 2021, the excise duty on fuel and diesel was reduced by Rs 5 and Rs 10, respectively.

Excise duty collections in FY23 are expected to be Rs 3.35 trillion, down 14% from FY22’s actuals of Rs 3.9 trillion. The value of customs duty receipts is anticipated to be Rs 2.13 trillion, up 7% from the previous year.

Unlike other taxes that are levied on an ad valorem basis, excise duties (and cesses) are levied as specific levies.

With the government counting on GST to drive overall indirect revenue growth, the CBIC is focused more on auditing returns to ensure compliance.

“We have identified roughly 35,000 GSTINs (issued to business entities) for 2017-18 (first year of GST rollout) based on risk for examination in the first phase,” Johri added. GSTINs will be identified for FY19 using data analytics as the year proceeds, he added.

The CBIC is looking for consistency in how firms report input supplies, output supplies, input tax credits, and tax payments on their tax forms.

“Wherever we uncover a flaw, we’ll bring it to the attention of taxpayers.” “These enterprises’ income tax payments will also be counted at the back-end,” the official stated.

The Centre is developing a cooperative approach with states to improve compliance in a coordinated manner. The group of ministers (GoM) on IT issues, led by Maharastra deputy chief minister Ajit Pawar, is likely to deliver its report on how to employ data analytics technologies to plug tax leakages and evasions in the near future.