India's GST revenue continues upward trend, reaching Rs 1.73 lakh crore in May 2024

India's Goods and Services Tax (GST) collections maintained their robust growth in May 2024, reaching Rs 1.73 lakh crore ($21.1 billion USD). This marks a 10% year-on-year increase compared to May 2023, signalling a positive trend in economic activity.

Strong Domestic Growth Offsets Import Slowdown

The growth in GST revenue was primarily fueled by a significant 15.3% surge in domestic transactions. This indicates a healthy uptick in consumer spending and business activity within India. While imports saw a 4.3% decline, likely due to softening global demand, the strong domestic performance helped drive overall GST revenue upward.

 

Key Highlights of May 2024 GST Collections:

Gross GST Revenue: Rs 1.73 lakh crore

Year-on-Year Growth: 10%

Net GST Revenue (after refunds): Rs 1.44 lakh crore

Domestic Transactions Growth: 15.3%

Import Transactions Growth: -4.3%

FY 2024-25 Collections Show Positive Momentum

The positive trend extends to the cumulative GST collections for the fiscal year 2024-25 (April 2024 to May 2024). Total gross GST revenue for this period reached Rs 3.83 lakh crore, representing a substantial 11.3% increase compared to the same period last year. This robust performance is attributed to a combination of increased domestic consumption (up 14.2%) and a marginal rise in imports (up 1.4%).

 

State-Wise Trends and Inter-Governmental Settlements

The report also highlights state-wise GST collection data, with significant variations in growth rates. Maharashtra, Karnataka, and Gujarat remained top performers. The central government made substantial inter-governmental settlements, transferring funds from the Integrated Goods and Services Tax (IGST) pool to states to ensure their financial health.

Gunjan Prabhakaran, Partner & Leader, Indirect Tax, BDO India said, "The 10% increase on a year-on-year basis in GST collections is largely driven by the significant increase in collections in North Indian States, like UP, Delhi, Haryana, Punjab etc."

Positive Outlook for India's Economy

The sustained growth in GST revenue is a positive indicator for the Indian economy. It reflects increasing consumer confidence, robust business activity, and a broadening tax base.

 

Mahesh Jaising, Partner. Deloitte India said, "The gross GST revenue collection of ₹1.73 lakh crore in May 2024, with a year-on-year growth of 10% and 11.6% for FY 24-25, indeed signifies a very positive trend. With the statutory time limit for first few years of GST concluding over next few months, there is also an indication of the effectiveness of tax administration & better enforcement efforts. The continued buoyancy in domestic GST collections in the backdrop of muted growth in import GST also points to increased economic activity and sustained domestic demand’ ‘The continued & consistent buoyancy will hopefully help policymakers make bolder GST reforms, as we move to a GST 2.0 soon!’

MS Mani, Partner, Deloitte India commented, "These collections, which relate to supply of goods and services transactions on April 24, for which GST has been paid in May 24, indicate the beginning of a new normal in excess of Rs.1.7 Trillion in FY25 compared to Rs1.6 Trillion during FY24. This is in line with the recent GDP estimates which indicate a robust economy, which does not appear to have been impacted much either by the election season or the heat wave across the country. The resilience shown by the GST collections, without significant seasonal or event-based variations across recent months, indicates the maturity of the GST system. There will now be renewed confidence in moving ahead with the next stage of reforms in the coming months, without significant concerns on the revenue impact that such reforms could elicit."

Source:- Business Today