E-Paper
Aug GST mop-up 5th best ever at ₹1.75 lakh crore
August's GST revenue reached nearly ₹1.75 lakh crore, marking a 10% year-on-year growth. Despite higher refunds, net collections rose by 6.5%, reflecting a robust economy.
The Goods and Services Tax (GST) revenue in August reached nearly ₹1.75 lakh crore, the fifth highest monthly collection since the new indirect tax regime started in July 2017, showing 10% year-on-year growth, according to official data released on Sunday.
Lower domestic collections with higher GST refunds resulted in a single-digit growth in the net tax collection for August 2024. After refunding ₹24,460 crore out of the ₹1,74,962 crore gross revenue, the net collection in the month increased only by 6.5% on an annualised basis at ₹1,50,502 crore. Refunds in August saw 38% y-o-y jump as compared to ₹17,723 crore in August 2023.
Experts attribute various factors for relatively lower growth in net collections – technology-driven timely refunds, higher base effect and disruptions in supplies because of heavy rains. According to news reports, the country received 9% more rainfall than average in July. August collection data is based on supplies of July as the monthly GST numbers reflect the actual business transactions of the previous month.
“Despite a decline in net GST revenue due to increased refunds, the continued growth in gross GST collections indicates a robust economy. The shift towards self-reliance is evident in the decreased imports and increased exports,” said Saurabh Agarwal, tax partner at consultancy firm EY. The government’s commitment to reduce working capital costs for businesses facing inverted duty structure is demonstrated by the higher domestic GST refunds,” he added.
Higher refunds are also a sign of efficiency in processing of returns, experts said. “It is encouraging to see a significant surge in processing of GST refunds in this month,” Abhishek Jain, indirect tax head and partner at KPMG, said.
Experts expect collections to improve in the coming festive period from the next month. “The GST collections seem to have stabilised around ₹1.75 lakh crore now. With the kick-off to festivities, the next few months are expected to witness a further surge,” Jain said.
Even as the annualised net collection in August 2024 has seen single-digit growth, cumulatively both gross and net revenues in April-August 2024 period exhibited over 10% y-o-y jump, according to the latest data. Gross revenue in the first five months of the current financial year rose to ₹9,13,855 crore as compared to ₹8,29,796 crore in the same period last year, a 10.1% growth. Cumulative net GST collections also jumped by 10.2% to ₹8,06,475 crore in April-August 2024.
“A 10% increase in collections on a year-to-month basis at the start of the festive season for the year indicates that consumption is robust and will only improve further in the coming festival months. This would give renewed confidence that the collection targets for the year would be achieved,” said MS Mani, partner at Deloitte India.
Data pointed at single-digit growth in GST collections by some manufacturing states such as Gujarat (6% annualised growth in August 2024 at ₹10,344 crore), Tamil Nadu (7% at ₹10,181 crore), and Telangana (4% at ₹4,569 crore). Andhra Pradesh reported a y-o-y contraction of 5% at ₹3,298 crore in August 2024.
The collections showed healthy growth in Haryana (12% y-o-y jump in August 2024 at ₹8,623 crore, Uttar Pradesh (11% at ₹8,269 crore), Madhya Pradesh (12% at ₹3,438 crore), Karnataka (11% at ₹12,344 crore) and Maharashtra (13% at ₹26,367 crore).
“The ability of large states like Maharashtra, Karnataka, UP, MP and Haryana to record double-digit increases in collections once again indicates the robust consumption in these states accompanied by the tax authorities’ measures to improve compliance and crack down on evasion. However, the single-digit increase in large states like Gujarat, AP and Tamil Nadu would engage the attention of the tax authorities in these states,” Mani said.
It is expected that the apex decision-making body on indirect taxes – the GST Council – in its meeting on September 9 may review the asymmetry in collections. The net collection has grown “a tad lower” than what the government might have been expecting, Pratik Jain, partner at PwC India, said, adding that the GST council “may want to look into this aspect in the upcoming meeting, particularly in the context of expected GST rates rationalisation”.
