InvestorQ : What explains the record GST collections in the month of December 2020?
Rashi Mehra made post

What explains the record GST collections in the month of December 2020?

Archita Jajjoo answered.
2 years ago

For the month of December 2020, Indian GST collections were at a record level of Rs.115,000 crore. This was a clear signal of an economic revival as GST collections posted growth of 11.6% YOY. This is also the third straight month in this year when the GST collections crossed the Rs.1 trillion mark. It is largely due to the drive against GST evaders.

The sharp rise in the GST collections underline the fact that normalcy in economic activity seems to be returning after months of disruption caused by the COVID-19 lockdown. However, it must be noted that the December 2020 GST numbers account for transactions in November 2020; the festival season. Hence next month could be more revealing.

For December 2020, revenues from import of goods posted 27% growth, while the GST flows from domestic transactions including import of services grew by 8%. This spurt could be indicative of a spurt in import of high-end products like mobile phones and other electronic products. Tightening compliance and e-invoicing has also helped matters.

It may be recollected that e-invoicing is already effective from October 2020 for businesses with turnover of Rs.500 crore and more. At the same time, e-invoicing will gradually be extended to all businesses with turnover of Rs.100 crore. In addition, the leakage of revenues via tax credits has also been tightened and made more stringent.

In terms of segmental break-down, The CGST mop-up yielded Rs.21,365 crore and SGST mop-up yielded Rs.27,804 crore. The largest chunk of revenues arising from IGST was also sharply higher at Rs.57,426 crore. The compensation cess for Dec-20 stood at Rs.8,579 crore. Improvement in GST collections was across the board. 11 states showed double digit expansion in GST collections.