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2nd-highest GST collection as festive spending surges
The data comes a day after RBI governor Shaktikanta Das said India’s economic growth number in the second quarter (Q2) is likely to surprise “on the upside”
Goods & Services Tax (GST) revenue surpassed ₹1.72 lakh crore, the second-highest monthly collection since the new indirect tax regime started in July 2017, a figure driven mainly by economic buoyancy, robust domestic demand and stricter compliance, in what experts said indicated better-than-expected growth in the second quarter.
The indirect tax revenue, reflecting actual business transactions made in September, is the highest monthly collection if the month of April — which reflects transaction data from the financial year closing period of March — is excluded. The highest collection was in April 2023, when ₹1.87 lakh crore was deposited as GST.
The data comes a day after, speaking at the Business Standard BFSI Insight Summit, Reserve Bank of India (RBI) governor Shaktikanta Das said India’s economic growth number in the second quarter (Q2) is likely to surprise “on the upside”. Das based his observation on trends such as momentum of economic activities and some early indicators. The official GDP number for Q2 (July-September 2023), which is expected on November 30, was estimated by the RBI at 6.5% last month on October 6.
Another indicator that supports the idea that the economy has sped up was released by the ministry of electronics and IT, which said in a tweet that there were 11.41 billion mobile payment transactions made via the Unified Payments Interface (UPI) in October, up from 10.56 billion in September and 56% more than in the same period last year.
The amount transacted was ₹17.16 lakh crore in October, a growth of 42% year-on-year. In September and August, UPI transactions where in the ₹15.7 lakh crore range.
Saurabh Agarwal, tax partner at consultancy firm EY, said strong GST collection is “a reflection of the resilience of the Indian economy” amid global headwinds. “The collections in next month are likely to be on increased side due to festive season,” he said.
The gross GST collection in October 2023 was 13% higher compared to about ₹1.51 lakh crore in the corresponding month previous year. The total revenue from domestic transactions, including import of services, was also up 13% on an annualised basis.
The second highest collection pushed up the average monthly GST revenue in seven months of FY24 to little over ₹1.66 lakh crore, an 11% year-on-year jump.
Experts expect revenues to grow further due to festive demands during Diwali and Christmas.
Aditi Nayar, chief economist and head - research & outreach, ICRA Ltd, said: “GST collections recorded a meaningful sequential uptick to a higher than anticipated… benefitting from quarter-end adjustments related to transactions in the previous month as well as the overall momentum in the economy.” She said the central GST (CGST) collections would “mildly” exceed the Budget Estimate of FY24, which is ₹9.56 lakh crore.
According to the Union finance ministry, the gross GST revenue collected in the month of October was ₹1,72,003 crore, including ₹30,062 crore as CGST, ₹38,171 crore as state GST (SGST), and ₹91,315 crore as integrated GST (IGST). The month also saw a robust ₹12,456 crore collection as cess, imposed on sin items and luxury goods such as cigarettes.
“The government has settled ₹42,873 crore to CGST and ₹ 36,614 crore to SGST from IGST. The total revenue of Centre and the states in the month of October, 2023 after regular settlement is ₹72,934 crore for CGST and ₹74,785 crore for SGST,” it said in a statement.
Experts also gave credit to the better tax administration for robust monthly collections. MS Mani, partner at Deloitte India, said: “The remarkable growth in GST collections over the past few months is not only on account of the underlying strong economic factors, but also due to the efforts of the tax authorities in deploying tools to compare data sets to determine short payment and evasion.”
“The growing emphasis on audits led by specific information available on various databases, not only on the GST portal, has led to a significant increase in compliance across sectors and states. This is also reflected in the upsurge in the GST collections across key manufacturing and consuming states,” he added.
