In what could be assessed as early signs of slowdown getting reflected in the indirect tax collections, the Goods and services tax (GST) Secretariat has raised concerns on collections and compensation in the agenda note of the upcoming GST Council meet.

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Secretariat, while penning down the trends in the current revenue position under GST regime for the current fiscal, has said that the compensation kitty is likely to fall short of fund required to pay states by February 2020.

According to the copy of the GST Council agenda, reviewed by CNBC-TV18, revenue position trend indicates that “the total amount available by end of February, when last installment of compensation during the current year shall be released, will be Rs 73,584 crore. Therefore, as at the end of February, 2020, the amount of cess available in the fund shall fall short for payment of compensation for loss of revenue till the bimonthly period Dec-Jan.”

Senior government officials, who monitor GST collections closely at North block too shared a same concern.

Talking to CNBC-TV18, a top government official said, “The compensation requirement as of today is around Rs 14,000 per month, however, the collections show that on an average the government is collecting only Rs 7,000 a month. This trend indicates that centre and states, both will have to take a serious look at the compensation. Any rate cut or decision that can impact the collections should be a cautious one.”

Centre has promised a 14 percent compounded annual growth rate over FY16 revenue collections as compensation to states which it pays through the funds collected in the compensation cess kitty.

Not just this, the council’s agenda also notes that on a monthly basis, revenue has fallen from peak of 16 percent (m-o-m) in March 2019 to 5 percent in August 2019. Official call this a sign of a concern too.

“The monthly growth increased from September, 2018 onwards and peaked during November, 2018 at 17 percent and then remained at around 13 percent between December 2018 to February 2019. It again peaked to 16 percent during March, 2019 but has fallen to 5 percent in August, 2019 respectively,” council agenda document says.

A declining trend is also visible in the number of returns getting filed in this fiscal.

The trend from April-July shows that no of GSTR3B returns filed are also decreasing from 81 percent in April 2019 to 74.2 percent in July 2019.

Meanwhile, on a state wise analysis of the revenue collections, only 5 north eastern states show a revenue growth during April-August 2019, all other states and UTs continue to be in a revenue deficit.

“The average revenue decline in April-Aug 2019 has increased to 20.9 percent as against 12.7 percent (April-Aug 2018),” according to the document.

First Published:Sept 16, 2019 7:50 PM IST