Mfg activity at 16-mth high, GST inflow up 7.5%

New Delhi: Goods and services tax (GST) collections rose 7.5% to Rs 1,95,735 crore in July, showing signs of a pick-up from the previous month, although the growth was slower than a year ago.According to the latest official numbers, collections from domestic sources in July, based on transactions in June, were 6.7% higher at a little over Rs 1.4 lakh crore.

Those from imports were better, rising 9.7% to Rs 52,712 crore.

In recent months, the domestic source has been weak, which is also visible in the muted expansion of factory output and a sharp moderation in direct tax collections.On the positive side, refunds soared 67% to Rs 27,147 crore, ensuring adequate liquidity for businesses. As a result, net collections grew 1.7% to Rs 1,68,588 crore. In recent months, finance minister Nirmala Sitharaman has also nudged tax department officials, both direct and indirect, to ensure that refunds are processed quickly.

J&K, Chandigarh, Odisha, Jharkhand, Mizoram, Manipur and Goa witnessed contraction in collections, while some of the large jurisdictions, such as Delhi (2%) Gujarat (3%), Maharashtra (6%), UP and Karnataka (7% each) saw muted growth.The numbers also resulted in calls for a review of GST. "Further 117% rise in domestic refunds, most of which may be inverted duty structure refunds, show that GST rate rationalisation should be done sooner rather than later.

While govt has removed inverted duty structure on many goods previously, still certain new-age goods suffer inverted duty structure. For example, lithium-ion batteries are liable to 18% GST but parts of lithium-ion batteries may still be 28%.

This would lead to an inverted duty structure and consequent higher refunds leading to inefficiency in the GST system," said Vivek Jalan, partner at Tax Connect Advisory, a consulting firm.Besides, there were suggestions to look at ways to step up revenue. "After a tepid growth in the previous month as well, the GST council may like to discuss the possible measures to augment revenues in the next meeting. With compensation cess going away, the states may also be a bit more concerned about slowdown in GST collections," said Pratik Jain, partner at Price Waterhouse & Co.