Page 12 - Banking Finance October 2019

GST UPDATE

Jai Ram announces GST GST collections lower below Rs 1L cr in August
cut on hotel tariffs to Goods and services tax (GST) collections registered a drop below the psycho-
logical Rs 1 lakh crore in August 2019, which was 4.5%
boost tourism higher than a year ago but 3.8% lower than the mop-

Chief Minister of Himachal Pradesh up in July. According to the finance minister’s latest
Jai Ram Thakur data, GST collection estimated for August is Rs 98,202
has said the re- crore. While central and state GST collections grew
cent economic by around 15% each compared to August 2018, integrated GST was almost 2%
reforms, includ- lower, partly due to weak imports. Cess on luxury and sin goods fell 4.6% led by
ing lowering of the slump in auto sales.
Goods and Ser- During April-August 2019, overall GST collections are estimated at Rs 5.1 lakh
vice Tax (GST) crore, compared with Rs 4.8 lakh crore a year ago — a rise of 6.4%, which is
on rooms tar- just half the asking rate as the government has budgeted for a growth of 13%
iffs, announced by the Centre will for the current financial year.
benefit hoteliers across the state, es- The latest numbers will pile additional pressure on the government, given that
pecially Shimla, Kullu and Manali,
the performance so far has been below par and the problem is compounded by
and subsequently spur tourists’ in- the economic slowdown, which has resulted in a sharp drop in the sale of auto-
flow in the state. mobiles and consumer goods. “This slight dip in revenue below Rs 1 lakh crore
The GST Council has decided to lower may be linked to the general slowdown in industry. However, a growth vis-a-vis
GST rates on hotel tariff and outdoor the same month in the last year does reflect better GST compliance and pay-
catering, giving a boost to the hos- ment,” said Abhishek Jain, tax partner at consulting firm EY.
pitality sector. The GST rate on ho- While compliance in terms of filing by the due date improved from 67 lakh for
tel rooms with tariffs of up to Rs August 2018 to 76 lakh this August, several states, especially the so-called
7,500 per night has been cut to 12 industrialised ones, have seen collections grow lower than the promised 14%
per cent from the existing 18%. Simi- rate. The finance ministry said that Rs 27,955 crore have been released to the
larly, the tax on room tariff of above states as GST compensation for June-July, 2019.
Rs 7,500 has been slashed to 18 per
cent from the existing 28 per cent. Amit Mitra urges centre to extend GST compensation
There will be no GST on room tariffs
of below Rs 1,000 per night. Besides, tenure
the rate on outdoor catering has also With an aim to extend the tenure of the GST compensation to states by three
been decreased from 18 to 5 per years, West Bengal finance minister Amit Mitra has urged
cent. N.K. Singh, chairman of the Fifteenth Finance Commission.
After the implementation of the Goods and Services Tax in
Addressing a press conference here,
2017, it was decided that the Centre would compensate
the chief minister said the decision the states for the revenue shortfall on account of the shift
will directly benefit Himachal Pradesh to the new indirect tax regime for a transition period of
and boost tourism. “The decisions five years, which ends in 2022.
have been appreciated by the indus-
trialists and hoteliers at state, na- Several states, including Bengal, have expressed their concern before the GST
Council over declining collections limiting their ability to implement the centrally
tional and international level,” the
sponsored schemes, necessitating greater compensation.
chief minister said.
“States today have the burden of 60 per cent of the development expenditure
There are as many as 3,084 regis-
on their shoulders. What is the receipt of the state? GST collection is not in-
tered hotels, 1,654 registered
creasing. So, I said to honourable N. K. Singh at GST meetings to see the diver-
homestays and nearly 44,552 rooms gence between what we spend and what we receive. It is my fear that in 2022,
having an average occupancy of 30 we will fall off the cliff,” Mitra said at the 165th annual general meeting of the
per cent in Himachal. Bengal Chamber of Commerce and Industry.

12 | 2019 | OCTOBER | BANKING FINANCE