CHANAKYA NATIONAL LAW UNIVERSITY,

NYAYA NAGAR, MITHAPUR, PATNA – 800001.

PANDEMIC AND GST REVENUE

FINAL DRAFT SUBMITTED IN FULFILMENT OF THE COURSE TITLED

MACRO ECONOMICS

SUBMITTED TO:-
Dr. SHIVANI MOHAN
Ass. Professor of Economics
SUBMITTED BY: CHITRAGUPTA
SHARAN
ROLL NO : 2116
SEMESTER : 4TH
SESSION : 2019-2024
B.A. LL.B. (Hons.)

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 ACKNOWLEDGEMENT

The researcher takes this opportunity to express his profound gratitude and deep regards to Dr.
SHIVANI MOHAN ma’am for his expert guidance, monitoring and constant encouragement
throughout the course of this project. The blessings, helps and guidance given by her time to time
shall carry the researcher along with the journey of life on which the researcher is about to embark.
The researcher is obliged to staff members of CHANAKYA NATIONAL LAW UNIVERSITY for
the valuable information provided by them in their respective fields. The researcher is grateful for
their co-operation during the period of his assignment.
Lastly,
I owe the present accomplishment of my project to my friends, who helped me immensely with
materials throughout the project and without whom I couldn’t have completed it in the present way. I
would also like to extend my sincere gratitude to my parents and all those unseen hands that helped
me at every stage of my project.
CHITRAGUPTA SHARAN

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 DECLARATION BY CANDIDATE
I hereby declare that the work reported in the BA, LL. B (Hons.) Project Report entitled “PANDEMIC
AND GST REVENUE” submitted at Chanakya National Law University is an authentic record of my
work carried out under the supervision of Dr. SHIVANI MOHAN. I have not submitted this work
elsewhere for any other degree or diploma. I am fully responsible for the contents of my Project
Report.

SIGNATURE OF CANDIDATE
NAME OF CANDIDATE: CHITRAGUPTA SHARAN
CHANAKYA NATIONAL LAW UNIVERSITY, PATNA

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 TABLE OF CONTENTS
ACKNOWLEDGEMENT ............................................................................................. 2
DECLARATION BY CANDIDATE ............................................................................ 3
1. INTRODUCTION................................................................................................... 5
AIM AND OBJECTIVES ............................................................................................. 7
RESEARCH METHODOLOGY .................................................................................. 7
SOURCES OF DATA ................................................................................................... 7
HYPOTHESIS .............................................................................................................. 7
LIMITATIONS ............................................................................................................. 8
MODE OF CITATION ................................................................................................. 8
REVIEW OF LITERATURE ........................................................................................ 8
2. METHODOLOGY TO PROJECT GST COLLECTION ........................................ 9
TABLE 1 ................................................................................................................................ 10
3. GST REVENUE PROJECTIONS ......................................................................... 11
A) PROJECTION OF OVERALL GST COLLECTION OF 2020-21 ........................ 11
B) PROJECTION OF STATE GST COLLECTION........................................................... 12
4. VALIDATION OF PROJECTIONS ..................................................................... 15
5. COMPLIANCE IN FILING GST RETURNS ....................................................... 16
6. CONCLUSIONS ................................................................................................... 17

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 1. INTRODUCTION
Tax from consumption like VAT/ GST is likely to fall due to the impact of lockdowns and lower
consumer confidence, as well as a potential shift towards the consumption of basic necessities,
which are either exempted or taxed at lower rates (OECD 2020).
Though the spread of COVID-19 is on an apparent decline in India, the economic impact of the
pandemic is still evolving, as new waves of COVID-19 infection are striking locally. However, as
GDP data of last three quarters is now available, and as GST shows the brightest sign of recovery
among all revenue streams, an attempt is made in this paper to project GST revenue. The paper
further delves into the issue of compensation to states in the case of revenue shortfall enshrined in
the prevailing law, and presents an estimate of GST revenue shortfall that Indian states may likely
to face in 2020-21.
GST collection of October 2020 shows 10.2 percent Year-On-Year (YOY) growth. October 2020 is
the second consecutive month (besides September 2020) of the current fiscal year which shows a
positive growth (YOY) in GST collection. This is a positive sign of recovery of Indian economy
from the ongoing COVID-19 pandemic. The growth in GST collection realized in the month of
October 2020 is a combination of gradual unlocking of the economy, increase in economic activity,
and increase in consumption demand due to festive season. However, the positive growth cannot be
fully attributed to delayed submissions of GST returns (GSTR-3B) of previous months of the current
fiscal year, as commented by many.
In 2019-20 growth rates in GST collection declined during September (-3%) and October (- 5%)
with respect to respective months of 2018-19. After maintaining an average monthly (YOY) growth
rate of 6 percent during April to August 2019, the fall in growth rates in GST collection during
festive months (September and October of 2019) and in March 2020 (-8%) resulted in fall in growth
rate in overall GST collection of 2019-20 to 3.8 percent. Barring the three months, average monthly
growth rate was 7 percent in 2019-20. Average monthly (YOY) growth rate in GST collection was
14.4 percent during November 2018 to March 2019.
During November 2019 to March 2020 average monthly (YOY) growth rate fell down to 4.6
percent. The difference in growth path of 2019-20 with respect to 2018-19 may be attributed to
several structural changes initiated by the GST Council in terms of increasing the threshold of GST

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 registration from Rs. 20 lakh to Rs. 40 lakh with effective from 1 April 2019,1 reducing tax rates of
several commodities during 2019-20, besides fall in nominal growth rate in Gross Value Added
(GVA at basic prices, 2011-12 series) from 10.5 percent in 2018-19 to 7 percent in 2019-20. GST
collection in October 2020 shows 17.12 percent growth from the average GST collection during Q2
(July to September) of 2020-21 (i.e., Rs. 89,784 crore). According to monthly press releases of the
Department of Revenue (DoR), Ministry of Finance, 80 lakh GSTR-3B returns are submitted in the
month of October 2020 as compared to 73.83 lakh in October 2019 and 67.45 lakh in October
2018.2 According GSTN online database, till July 2020 cumulatively 262.15 lakh GSTR-3B
returns are filed for 2020-21 (as on 31 August 2020). The corresponding figure for 2019-20 up to
July 2019 was 383.60 lakh and it was 355.47 lakh for 2018-19 (as on 30 June 2020). This shows
that pending GSTR-3B returns for 2020-21 are expected to be filed over the months of the current
financial year and therefore corresponding revenues are expected to be realized. Many businesses
are still not operating to their full capacity/ potential; therefore, it is also expected that average GST
collection per GSTR-3B return would be less in 2020-21 as compared to the previous years.

1
In the 32nd meeting on 10 January 2019, the GST council decided to increase GST registration threshold for sales of
goods to Rs. 40 lakh from Rs. 20 lakh for general category states and from Rs. 10 lakh to Rs. 20 lakh for special
category states with effective from 1 April 2019. There was no change in threshold limits for service providers. All
general category states (except Telangana) and Himachal Pradesh, Delhi, Jammu & Kashmir, Ladakh, Assam opted for
Rs. 40 lakh threshold. Puducherry, Meghalaya, Mizoram, Tripura, Manipur, Sikkim, Nagaland, Arunachal Pradesh and
Uttarakhand opted for Rs. 20 lakh threshold. The threshold of annual turnover for composition scheme has also
increased from Rs. 75 lakh to Rs. 1.5 crore with effective from 1 April 2019.
2
GSTR-3B returns are monthly consolidated statement of outward, inward supplies (turnovers) and tax liabilities of
taxpayers. Taxpayers pay taxes after adjusting available input tax credits by submitting GSTR-3B returns. GSTR-1
returns are monthly detailed statements of outward supplies of taxpayers.

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 AIM AND OBJECTIVES
1. The researcher aims for making this project is to study about impact of pandemic on GST.
2. The researcher aims to study about measures to deal with this impact of pandemic on GST.

RESEARCH METHODOLOGY
The researcher will be relying upon Doctrinal Method of research to complete the project.

SOURCES OF DATA
The researcher will use secondary sources to complete the project
Secondary Sources – WEBSITES, ARTICLES, REPORTS, NOTICES.

HYPOTHESIS
The researcher has assumed that,
• The pandemic has severely hit the GST revenue collection.
• The pandemic accounts for massive mismanagement in tax management.

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 LIMITATIONS
The researcher has time as well as territorial and time limitations in completing the project.

MODE OF CITATION
The researcher will follow BLUE BOOK (20TH EDITION) for completing the project.

REVIEW OF LITERATURE

The researcher has referred to a journal named “PANDEMIC AND GST REVENUE: AN
ASSESSMENT FOR UNION AND STATES” journal published by NATIONAL INSTITUTE OF
PUBLIC FINANCE AND POLICY authored by SACCHIDANANDA MUKHERJEE. Previous
studies have emphasized that;
Since its onset, the COVID-19 pandemic has spread to almost all countries of the world. The COVID-
19 pandemic has had and will continue to have very considerable effects on the tax collection and
management of tax collection. Revenue impact of COVID-19 pandemic would be different across
different economies depending on duration and severity of the impact of pandemic in terms of
mortality and morbidity, stringency; duration and spatial spread of confinement measures adopted,
structure of the economy, exposure to international flows including trade and tourism, structure and
composition of government revenues, and measures taken to cushion firms and households from the
impact of the pandemic (OECD 2020). Though the spread of COVID-19 is on an apparent decline in
India, the economic impact of the pandemic is still evolving, as new waves of COVID-19 infection are
striking locally.

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 2. Methodology to Project GST Collection
Since stabilization of tax buoyancy in the GST regime may take some time and uncertainties
surrounding GST collection have heightened due to ongoing COVID-19 pandemic. Though some
projections on economic growth rate of 2020-21 are available,3 given the magnitude of
disruptions and damages caused by the COVID-19 pandemic, any assumption on prospective tax
buoyancy for 2020- 21 may not be free from criticism. Given the constraints of the existing
methodologies, an alternative method to project GST collection of 2020-2 is discussed below.
Given the experience of GST collection during July 2017 to October 2020, first tried to
understand the pattern of GST collection in India (Table 1). This shows that GST collection falls
during Q2 as compared to Q1. An in-depth assessment of causes of falling GST collection during
Q2 may be useful. During Q2 of 2018-19, GST collection on account of domestic economic
activities (CGST, SGST, IGST– Domestic Component and GSTCC – Domestic Component)
falls. Fall in domestic components of IGST and GSTCC collection to some extent compensated
by higher growth in IGST and GSTCC collections from imports during Q2 of 2018-19. However,
similar growths is not observed in IGST and GSTCC collections from imports during Q2 of 2019-
20; as a result overall IGST and GSTCC collections fall in Q2 of 2019-20. Fall in IGST collection
from imports continued during Q3 and Q4 of 2019-20 which resulted in fall in overall GST
collection. Since these components (IGST and GSTCC collections from imports) together
contribute on average one-quarter share in total GST collection, any volatility in GST collection
from this basket of substantial revenue is expected to have impact on overall GST collection.
Therefore, assuming average GST collection during Q2 of 2020-21 as a base for the remaining
months of the current fiscal year would be an alternative to assume GST collection in October
2020 as a base. Moreover, assuming average GST collection during Q2 of 2020-21 as a base will
produce the lower bound estimate of full year projection, as compared to GST collection in
October 2020 in analysis. Growth in GST collection in October 2020 (10.2%) is outstanding as
compared to growth observed in October 2019 (-5%) and October 2018 (7.9%).

3
In October 2020, Reserve Bank of India (RBI) projects 9.5% contraction of Indian economy in 2020-21. According to the
World Bank, India’s GDP growth is likely to contract 9.6% in FY21. In October 2020 issue of World Economic Outlook,
the International Monetary Fund (IMF) projects 10.3 percent contraction of India's real GDP during 2020- 21.

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 Table 1: Component-wise, Sequential Growth Rate in Quarterly GST Collection in India
(QoQ, %)

2017-18 2018-19 2019-20 2020-21

Component of GST Q2 to Q3 to Q1 to Q2 to Q3 to Q1 to Q3 to
Q2 to Q3 Q1 to Q2
Q3 Q4 Q2 Q3 Q4 Q2 Q4
CGST 40.10 7.80 -7.90 6.93 12.11 -8.83 9.30 6.23 44.85

SGST 37.78 3.01 -7.07 5.96 11.97 -8.60 8.02 4.59 53.19

IGST 11.35 0.44 0.49 0.79 -1.64 -5.09 -0.69 1.66 42.25

IGST – Domestic 35.93 -0.04 -7.29 4.34 4.23 -10.67 8.81 4.74 44.81

IGST – Imports -7.46 0.99 9.24 -2.60 -7.65 1.45 -10.50 -2.21 39.44

GST Compensation Cess

46.18 3.16 -0.13 -0.27 6.41 -8.96 0.94 9.40 44.34
(GSTCC)
GSTCC – Domestic 50.07 3.16 -0.53 -1.33 6.88 -7.83 0.46 9.49 45.81

GSTCC – Imports 17.07 3.16 3.56 9.25 2.58 -17.90 5.24 8.63 32.91

Total GST 23.74 2.50 -2.80 2.87 4.52 -6.97 3.37 3.88 45.43

GST without GSTCC 21.93 2.43 -3.04 3.16 4.35 -6.79 3.58 3.41 45.52
Source: Computed based on monthly press releases of the Department of Revenue, Ministry of
Finance, Government of India.

Turning to year-on-year growth rates, analysis of quarterly GST collection shows a fall in growth
rate of IGST collection since Q2 of 2019-20. Growth rate in IGST collection from imports
continues to fall since Q1 of 2019-20. On average half of the overall GST collection comes from
IGST (inter-state and international trade) and therefore continuous fall in growth rate in IGST
collection may have caused fall in growth rate of overall GST collection. Except during Q4 of
2019-20, quarterly growth rate in GSTCC collection is also continuously falling since Q2 of
2019-20. This could be attributed in part to fall in sales of passenger cars in India. As compared to
2018-19, year-on-year growth (YOY) rates in quarterly GST collection are lower in 2019-20. The
ongoing pandemic has further reduced the GST collection in 2020-21.

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 3. GST Revenue Projections
Projecting GST collection for the remaining months (November 2020 to March 2021) of the
current fiscal year based on four alternative scenarios.
A) Projection of Overall GST Collection of 2020-21
In Scenario I, assuming GST collection of October 2020 as a base and project GST collection for
November 2020 to March 2021 based on monthly growth (YOY) in GST collection during
November 2019 to March 2020 with respect to corresponding months of 2018-19. For example, if
Bj is the base of GST revenue in the jth scenario and rtj is the monthly growth (YOY) rate (in %)
of GST collection of the tth month in jth scenario, the projected GST collection of the tth month
under the jth scenario would be Gtj= Bj*(1+(rtj/100)). Similarly, the projected GST collection of
the (t+1)th month under the jth scenario would be G(t+1)j = Bj*(1+(r(t+1)j/100)). The estimated
GST collection in Scenario I is Rs. 1,109,636 crore (sum of realized GST collection during April
to October 2020 and projected GST collection during November 2020 to March 2021) and it is
9.2 percent lower than GST collection realized in 2019-20 (i.e., Rs. 1,222,131 crore).
In Scenario II, assuming GST collection of October 2020 as a base and project GST collection
for November 2020 to March 2021 based on monthly growth (YOY) in GST collection during
November 2018 to March 2019 with respect to corresponding months of 2017-18. The estimated
GST collection in Scenario II is Rs. 1,160,957 crore and it is 5.01 percent lower than the GST
collection realized in 2019-20.
In Scenario III, assuming average monthly GST collection during Q2 of 2020-21 (i.e., Rs.
89,784 crore) as a base and project GST collection during November 2020 to March 2021 based
on monthly growth (YOY) in GST collection during November 2019 to March 2020 with respect
to corresponding months of 2018-19. The estimated GST collection in Scenario III is Rs.
1,029,250 crore and it is 15.78 percent lower than the GST collection of 2019-20.
In Scenario IV, assuming average monthly GST collection during Q2 of 2020-21 (i.e., Rs.
89,784 crore) as a base and project GST collection during November 2020 to March 2021 based
on monthly growth (YOY) in GST collection during November 2018 to March 2019 with respect
to corresponding months of 2017-18. The estimated GST collection in Scenario IV is Rs.
1,073,069 crore and it is 12.2 percent lower than the GST collection of 2019-20.

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 B) Projection of State GST Collection
GST collection of states comprises of State GST (SGST) collection and IGST settlement on SGST
account.4 At the time of writing this paper, GSTN has released state-wise GST collection figures
(on account of CGST, SGST, IGST and GST Compensation Cess) up to August 2020 of the current
financial year. State-wise and component-wise GST collection data is yet to be released for
September and October of 2020-21. However, monthly GST collection figures released by the
Department of Revenue (DoR) show state-wise aggregate GST collection (sum of CGST, SGST,
IGST and Cess collection) for September and October of 2020-21. Estimating average share of
SGST collection during July to August of 2020-21 in aggregate GST collection for the
corresponding period by states based on GSTN database and applied it on state-wise aggregate
GST collection figures to estimate state-wise SGST collection in September and October of 2020.
estimated total SGST collection (before IGST settlement) for September 2020 is Rs. 23,097 Crore
and the SGST collection figure released (in overall GST collection) by the DoR for September is
Rs. 23,131 Crore. For October 2020, estimated total SGST collection is Rs. 25,845 crore and the
figure released by the DoR is Rs. 25,411 Crore. This shows that our estimate of SGST collection
for September 2020 is 0.15 percent (Rs. 34 crore) lower than the figure released by the DoR and
for October 2020 it is 1.71 percent (Rs. 434 crore) higher than the figure released by the DoR. The
differences between our estimates and the figures released by the DoR are not substantial to change
revenue profiles of states.
GSTN has also released State-wise IGST settlement on SGST account for the period April to
August 2020-21. To estimate state-wise IGST settlement corresponding to September and October
of 2020-21, first estimated the average percentage share of a state in total IGST settlement allocated
to SGST account during July to August of 2020-21. In the next step, applying the share in
aggregate IGST settlement figures (on account of SGST) of September and October of 2020-21 as
released by the DoR in monthly GST collection statements, to estimate the state-wise IGST
settlement. added up state-wise SGST collection and IGST settlement figures for the period April to
October of 2020 and also estimate average state GST and IGST settlement figures for July to
September of 2020-21 to use as base in revenue projections.
In Scenario I, estimated monthly growth (YOY) in state-wise SGST collection (including IGST

4
IGST Settlement on SGST Account = SGST paid by using IGST Credit – IGST paid by using SGST Credit.

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settlement) during November 2019 to March 2020 with respect to corresponding months of 2018-
19. applying the monthly growth rates to base revenue, which is the SGST collection (including
IGST settlement) realized in the month of October 2020, to project GST collection during
November 2020 to March 2021. The sum of realized SGST collection (including IGST settlement)
during April to October 2020 and projected SGST collection (including IGST settlement) during
November 2020 to March 2021 gives us the expected state GST collection of 2020-21.
In Scenario II, Estimating monthly growth (YOY) in state-wise SGST collection (including IGST
settlement) during November 2018 to March 2019 with respect to corresponding months of 2017-
18. Applying the monthly growth rates to base revenue, which is the SGST collection (including
IGST settlement) realized in the month of October 2020, to project GST collection during
November 2020 to March 2021. The sum of realized SGST collection (including IGST settlement)
during April to October 2020 and projected SGST collection (including IGST settlement) during
November 2020 to March 2021 gives us the expected state GST collection of 2020-21.
For projection under Scenario III, estimated monthly growth in state-wise SGST collection
(including IGST settlement) during November 2019 to March 2020 with respect to corresponding
monthly figures of 2018-19. Applying monthly growth rates to base revenue, which is the average
monthly SGST collection (including IGST settlement) during July to September of 2020, to project
state GST collection during November 2020 to March 20201.
In Scenario IV, estimating monthly growth in state-wise SGST collection (including IGST
settlement) during November 2018 to March 2019 with respect to corresponding months of 2017-
18. Applying the growth rates to base revenue, which is the average monthly SGST collection
(including IGST settlement) during July to September of 2020, to project state GST collection
during November 2020 to March 2021.
For ease of presentation, classifying the states into two categories – major states comprising of
erstwhile general category states and minor states comprising of North-Eastern and hilly states and
United Territories with legislative assembly.
All states do not follow the same growth path in GST collection, e.g., Andhra Pradesh, Bihar and
Chhattisgarh are expected to do better in one scenario whereas Goa, Gujarat and Haryana are
expected to do better in another scenario. Among all major states, only Bihar and Odisha are
expected to have positive growth in State GST collection across all scenarios. Aggregate GST
collection of major states in 2020-21 may fall short of 3.3 percent to 12.3 percent of GST collection

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of 2019-20. However, different states may have different shortfall depending on growth in GST
collection that would be realized during November 2020 to March 2021.
Like major states, growth path in GST collection varies across minor states and some states are
expected to do better in alternative scenarios. Among all minor states, Himachal Pradesh and
Nagaland are expected to have positive growth in state GST collection across all scenarios.
Aggregate GST collection in 2020-21 of minor states may fall short of 4.6 percent to 16.5 percent
of GST collection of 2019-20.
The wide range in projected GST collection of 2020-21 may be considered as the likely band in
which actual GST collection may lie. Given the challenges involved in projection of GST and
uncertainties created by the ongoing pandemic, this is an attempt to explore alternative
methodology for GST revenue projection. With stabilization of the GST system and better
vailability of long time series data of GST collection, better projections could be made. Availability
of quarterly data of Gross State Value Addition (GSVA) and other high frequency indicators may
help to refine the projections and also contain the range of the projected values.

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 4. Validation of Projections
According to recent monthly statement released by the Department of Revenue, GST collection for
the month of November 2020 is Rs. 104,963. This figure coincides with monthly projection of GST
revenue of Rs. 104,634 crores for the month of November 2020. Moreover, monthly growth (YOY)
realized in GST collection for the month of November 2020 is 1.4 percent whereas according to our
projection it is 1.10 percent. This validates our projections.
In the 41st meeting of the GST Council held on 27 August 2020, the demand for GST
compensation by states is projected to be Rs. 3 lakh crore in 2020-21. Against the projected GST
compensation collection of Rs. 65,000 crore, the shortfall in GST compensation fund is expected to
be Rs. 2.35 lakh crore in 2020-21. According to our estimate the shortfall would be Rs. 2.36 lakh
crore in one of the scenarios. This further validates our projections.
The Reserve Bank of India (RBI), the World Bank and the International Monetary Fund (IMF)
have projected India’s growth rate of GDP for 2020-21.5 Since GST collection depends on nominal
GDP, Taking nominal growth rates (real growth rate + inflation) in projecting GST collection in
2020-21 across alternative assumptions of tax buoyancy. Since nominal growth rate of the current
financial year is projected to vary between -4.9 to -5.4 percent, as an alternative considering 3
percent contraction of nominal GDP and projected corresponding GST collection.
Projections of GST collections across alternative projections of GDP growth rates across alternative
assumptions of tax buoyancy and compare with our projected GST collection. It shows that though
our projections are conservative, they are in line with some of the alternative projections of GST
collection based on projection of GDP growth and tax buoyancy. This further validates our
projections.

5
RBI's Monetary Policy Report - October 2020 (https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=19980),
(https://www.worldbank.org/en/country/india/overview) last accessed on 2 December 2020.
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 5. Compliance in Filing GST Returns
Stabilization of GST revenue is likely to be achieved with stabilization in filing GST returns. A
large segment of taxpayers is not filing GST returns. Several initiatives have taken by the GST
council to improve compliance in filing GST returns, e.g., cancellation of GST registration for not
filing GSTR-3B returns for six or more than six return periods, blocking of E-Way Bill generation
facility for not filing two or more consecutive GSTR-3B returns, in the coming months
compliance is expected to improve. Based on data available from the GSTN database, estimated
the gap in filing GST returns as follows:
Gap in Filing GSTR-3B = (Number of Taxpayers Eligible to File GSTR-3B – Number of Taxpayers Filed
GSTR-3B)/ Number of Taxpayers Eligible to File GSTR-3B*100
Gap in Filing GSTR-1 = (Number of Taxpayers Eligible to File GSTR-1 – Number of Taxpayers Filed
GSTR-1)/ Number of Taxpayers Eligible to File GSTR-1*100
Gap in filing GSTR-3B is lower as compared to GSTR-1. Non-filers of GSTR-1 are higher than
non-filers of GSTR-3B. For effective tax enforcement, filing both the GST returns (GSTR-1 and
GSTR-3B) are required to assess possible instances of tax evasion. Gaps in filing GST returns
have gone up since Q4 of 2019-20. Lockdown due to COVID-19 outbreak may have caused
difficulties for taxpayers to file GST returns in Q1 of 2020-21. It is expected that compliance in
filing GST returns will improve with gradual unlocking of the economy.

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 6. Conclusions
Given the experience of GST collection in India during the last 13 quarters and also by factoring
in the pandemic induced economic contraction during the current fiscal year, present paper
projects overall as well as state-wise GST collections for 2020-21. The study builds four different
scenarios. Projected overall GST collection of 2020-21 of Union and States is expected to vary
between Rs. 10.3 lakh crore to Rs. 11.6 lakh crore compared to last fiscal year’s collection of Rs.
12.2 lakh crore. Estimates show that combined GST collection of major states (excluding north-
eastern and hilly states and UTs with legislative assembly) is expected to contract, though the
estimates vary between -3.3 and -12.3 percent.
The state-wise GST revenue estimated by for the year 2020-21 and the revenue under protection
as per the compensation principle adopted by the GST Council, gives the estimated revenue gap
of states for 2020-21.
Comparing the estimated revenue gaps with projected GST compensation collection to understand
revenue compensation requirement of states. GST compensation collection estimated is deduced
from the revenue gap to get the estimate of revenue shortfall in the GST Compensation Fund. The
compensation as per estimates may vary between Rs. 1.95 lakh crore to Rs. 2.45 lakh crore.
There is a large difference in filing GST returns, comparing GSTR-1 and GSTR-3B. Reduction in
mismatch between the two will result in significant increase in compliance and revenue.
Lockdown due to COVID-19 outbreak may have caused difficulties for taxpayers to file GST
returns in Q1 of 2020-21 but it has started improving thereafter.

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References

Gupta, Manish and Indira Rajaraman (2020), "Is the 14% Revenue Guarantee to States
Justified?", Economic and Political Weekly, 55(47):18-21.

Keen, Michael (2007), "VAT Attacks!", IMF Working Paper No. WP/07/142, Fiscal Affairs
Department, International Monetary Fund (IMF): Washington, D.C.

Mukherjee, S. and R. Kavita Rao (2019), “Fiscal Implications of Introduction of Goods and
Services Tax in India”, Report Submitted to the Fifteenth Finance Commission,
National Institute of Public Finance and Policy (NIPFP), New Delhi.
OECD (2020), "Tax policy and administration responses to COVID-19" Chapter 2 in Revenue
Statistics in Asian and Pacific Economies 2020, OECD Publishing, Paris,
https://doi.org/10.1787/d47d0ae3-en.