The Goods and Services Tax (GST) revenue crossed ₹1.17 lakh crore in September with a 22.5% year-on-year jump, the fourth-highest collection since its launch on July 1, 2017, and second highest in the current financial year, signalling robust recovery of business activities after the second wave of Covid-19 pandemic and increased compliance.
The annualised growth at ₹1,17,010 crore in September is also the highest ever for the month since the new indirect tax regime was launched. The GST collection in September 2017 was ₹94,064 crore. In September 2018, it was ₹94,442 crore, ₹91,916 crore in September 2019, and ₹95,480 crore in September 2020, according to official data.
The indirect tax collections, a weathervane of economic health, jumped over ₹1 lakh crore in three consecutive months after it plunged below the benchmark in June ( ₹92,849 crore) because of the second wave that hit India in April and May this year. The June collection figure indicates the volume of business transactions that took place in May. In May this year, most of the states were under complete or partial lockdown due to the second wave.
“The average monthly gross GST collection for the second quarter of the current year has been ₹1.15 lakh crore, which is 5% higher than the average monthly collection of ₹1.10 lakh crore in the first quarter of the year. This clearly indicates that the economy is recovering at a fast pace,” the Union finance ministry said in a statement.
Coupled with economic growth, anti-evasion activities, especially action against fake billers have also been contributing to the enhanced GST collections, it said. “It is expected that the positive trend in the revenues will continue, and the second half of the year will post higher revenues,” it added.
MS Mani, senior director at consultancy firm Deloitte India, said, “The GST collection figures indicate that growth of the economy is leading to stable collections, which would help in achieving the fiscal deficit target of 6.8% of GDP.”
Official data show buoyancy in tax collections in most of the industrial states such as Jharkhand (33%) and Goa, where hospitality and tourism, are the main business activities (33%), Karnataka (29%), Gujarat (28%), and Telangana (25%). Odisha has shown a robust 40% jump in revenue at ₹3,326 crore.
“Most of the key manufacturing states reporting a growth of 20% plus compared to last year does indicate that an economic revival is clearly in progress across key states,” Mani said.
According to the finance ministry, September revenue from import of goods was 30% higher compared to the same period last year, and the revenues from the domestic transactions (including import of services) are 20% higher than the revenues from these sources.
“The significant increase in GST collections both from import and domestic transactions indicate an acceleration in business activities, which is spread across states,” Mani said.
Experts said GST collection is increasing steadily and it will be robust in the coming festive months due to increased demand and expected reforms in the tax regime.
Aditya Singhania, the partner at Singhania GST Consultancy, said, “With the formation of GoMs [group of ministers] on rate rationalization to rationalize tax rates and GST system reforms to plug revenue leakages… etc we may see an acceleration in revenue in the second half of this fiscal year, and onwards.”
At the 45th meeting of the GST Council, the apex decision-making body on indirect tax matters, on September 17, decisions on rationalising tax rates were taken. It was decided to correct duty inversions in the textile and footwear sectors from January 1, 2022.
The Council also decided to set up two GoMs. The first one will examine ways to rationalise tax rates and review exemptions to augment revenues. The other one will discuss ways and means of using technology to further improve compliance.