Goods and services tax (GST) collection moderated in August compared to July, but exceeded the Rs 1.1 trillion mark with economic activity picking-up pace across major parts of the country as Covid-19 cases declined, official data showed on Wednesday.

       Robust revenues will help the government ramp up spending to ensure economic revival.

       The GST mop-up in August stood at Rs 1,12,020 crore as against Rs 1,16,393 crore in July according to the data released by the finance ministry. The latest numbers pertain to transactions done in July. The collection in August is 30 per cent higher than the levels in the corresponding month last year and up 14 per cent over 2019-20.

       The August collection is contrary to the sharp pick up seen in the daily e-way bill generation in July, posting a 17 per cent sequential growth. E-way bill generation, which indicates supply in the economy, recovered to an average of 2.1 million compared to 1.8 million in June.

       In April this year, the collection was at a record high of Rs 1.41 trillion.

       The GST mop up had fallen below the Rs 1 trillion mark for the first time in eight months in June, with large parts of the country facing localized lockdowns to contain the spread of pandemic.

       “With the easing out of COVID restrictions, GST collection for July and August 2021 have again crossed Rs 1 trillion, which clearly indicates that the economy is recovering at a fast pace. Coupled with economic growth, anti-evasion activities, especially action against fake billers have also been contributing to the enhanced GST collections,” said the ministry of finance in a press statement. The robust GST revenues are likely to continue in the coming months too, it added.

       During the month, the revenues from domestic transaction (including import of services) are 27 per cent higher than the revenues from these sources during the same month last year.

       Aditi Nayar, chief economist, ICRA Ratings said that the sequential dip in the GST collections, lower-than-expected core sector growth, and moderation in the August manufacturing PMI suggest that some caution is warranted regarding the strength of the recovery that is underway in the ongoing quarter. “We expect GDP growth in the ongoing quarter to range between 7.8-8.8 per cent, with the absolute level of GDP to continue to trail the pre-pandemic level as the services sector struggles to catch up with the rest of the economy,” said Nayar. She added that the GST collections remained healthy and will help to ease the cash flows of the Centre and the states.

       The economy posted a 20.1 per cent growth in the first quarter of the fiscal, as per official figures released by the National statistical office, and was in line with consensus estimates.

       M S Mani, senior director, Deloitte India, said most of the key manufacturing states have shown an increase of 25 per cent to 35 per cent in collections compared to the same period last year, indicating that the economic recovery may be faster in the current year.

       Manufacturing states such as Tamil Nadu, Maharashtra, and Karnataka have posted an over 30 per cent growth in collections compared to last year.

       Key segments of GST collection yielded less in August compared to July. For instance, central GST collection stood at Rs 20,522 crore compared to Rs 22,197 crore in July. State GST mop-up was Rs 26,605 crore as against Rs 28,541 crore in the previous month. However, compensation cess was at Rs 8,646 crore compared to Rs 7,790 crore in July.

       During August, the government settled Rs 23,043 crore to CGST and Rs 19,139 crore to SGST from IGST as regular settlement. In addition, the government also did an ad hoc IGST settlement in the ratio of 50:50 between Centre and states. The total revenue of Centre and the States after regular and ad-hoc settlements in August was Rs 55,565 crore for CGST and

       The government has been managing robust GST collections due to tightened enforcement through closer monitoring against fake-billing, deep data analytics using data from multiple sources including GST, income-tax and customs IT systems and effective tax administration. Easier compliance also encouraged return filing.

       The mop-up during the month is 30% higher than the levels in the same month last year and up 14% over 2019-20