At ₹1.52L-cr, GST collection in Oct second highest ever

Goods and Services Tax (GST) revenue in October saw a 16.6% year-on-year growth to almost ₹1.52 lakh crore on the back of increased sales during the festive season and better tax administration. Experts expect the trend to continue in November too.

Goods and Services Tax (GST) revenue in October saw a 16.6% year-on-year growth to almost ₹1.52 lakh crore on the back of increased sales during the festive season and better tax administration. Experts expect the trend to continue in November too.

At ₹1.52L-cr, GST collection in Oct second highest ever

The collection is the second highest ever, the second time the number has crossed the ₹1.50 lakh crore mark, and the eighth month in a row that it has been in excess of ₹1.40 lakh crore.

The gross GST revenue of ₹1,51,718 crore in October this year (for transactions in September) is the second-highest since the new indirect tax regime was launched in July 2017. The record monthly collection of ₹1,67,540 crore was achieved in April this year. Monthly GST revenues have been robust since January, establishing the new benchmark of ₹1.40 lakh crore, barring the month of February ( ₹1,33,026 crore).

Commenting on the revenue, the finance ministry said in a statement: “This is the ninth month [of the current calendar year] and the eighth month in a row now, that the monthly GST revenue has been more than the ₹1.4 lakh crore. During the month of September, 8.3 crore e-way bills were generated, which was significantly higher than 7.7 crore e-way bills generated in August 2022.” October collections reflect actual business activities in September.

As GST is consumption-based tax, experts said the high revenue reflects the robustness of the Indian economy, although some states saw a decline in revenue compared to a year ago. “The fact that the collections have moved up to a new level in excess of ₹1.5 lakh crore is impressive and is on account of primary and secondary festive demand together with the various measures taken to improve compliance,” said MS Mani, partner at Deloitte India.

While most major states registered a double-digit growth in GST collections for October (compared to the same month last year), revenues in Jammu & Kashmir, Assam, Chhattisgarh, and Bihar saw a decline.

Collections saw significant jump in major manufacturing states – Haryana saw a 37% growth in October revenues to ₹7,662 crore; Maharashtra (19%, ₹23,037 crore), Karnataka (33%, ₹10,996 crore), Tamil Nadu (25%, ₹9,540 crore) and Gujarat (11%, ₹9,469 crore), according to official data.

GST collections in J&K, however, dipped 34% from ₹648 crore in October 2021 to ₹425 crore in October. The collections fell 1% in Bihar, 13% in Assam (from ₹1,425 crore to ₹1,244 crore) and 3% in Chhattisgarh (from ₹2,392 crore in October 2021 to ₹2,328 crore in 2022).

The annualised fall in October revenue was a sharp 23% in the case of Manipur and Mizoram.

Experts said these are not-so-important states from the GST perspective, with low manufacturing activity and moderate trading activity. “Most of the major states have reported an impressive increase in collections indicating that it is a broad-based phenomenon across the country,” Mani added.

Saurabh Agarwal, tax partner at consulting firm EY, said that on sequential basis there is a consistency in revenue growth showing that “consumption patterns” remained the same. He said better (tax) administration by both the Centre and states has played the role in higher collections.

According to the Union finance ministry, GST cess in October was ₹10,505 crore (including ₹825 crore collected on import of goods), the second-highest till date. Experts say this signifies increased sales of luxury goods such as automobiles, and sin products such as liquor during the festive month. GST compensation cess is levied on luxury goods and sin products such as liquor, cigarettes, other tobacco products, aerated water, automobiles, and coal.

“This month’s collections mark the second-highest revenue collection ever, and can be attributed to increased spending on account of festive season starting. With the festive season continuing, the GST collections can further be expected to go up. This, coupled with revamped focus of the government on tax collections, can lead to further increase in collections in the coming months,” said Abhishek Jain, partner-Indirect Tax at KPMG in India.

Like Jain, many other experts expect collections in November, for activities in October, a month that saw two big festivals, to be high.