Record GST collection led by resilient economy; Elections to boost momentum, say experts
Record GST collection led by resilient economy; Elections to boost momentum, say experts
According to experts, the GST revenue for the month of March at Rs 1.78 lakh crore reflects not only a robust economic trajectory for India but also the efficiency of tax administration and compliance by taxpayers.
The March GST revenue showcasing second-highest collection at Rs 1.78 lakh crore reflects not only a robust economic trajectory for India but also the efficiency of tax administration and compliance by taxpayers, said experts. Per the data released by the finance ministry, India recorded gross Good and Services Tax (GST) revenue for the month of March 2024 at Rs 1.78 lakh crore, posting an increase of 11.5 per cent on-year. The ministry had stated that the surge was driven by a 17.6 per cent increase in GST collection from domestic transactions.
Harsh Shah, Partner, Economic Laws Practice, said, “March 2024 GST collection of Rs 1.78 lakh crore is the second highest since its rollout in July 2017. With this, the overall GST collection for FY 2023-24 is Rs 20.14 lakh crore, thereby surpassing the revised Budget estimate of Rs 18.10 lakh crore and recording a year-on-year increase of 11.5 per cent.”
Further, the central government settled Rs 43,264 crore to CGST and Rs 37,704 crore to SGST from the IGST collected, in the month of March. This translates to a total revenue of Rs 77,796 crore for CGST and Rs 81,450 crore for SGST for March 2024 after regular settlement. For FY 2023-24, the central government settled Rs 4,87,039 crore to CGST and Rs 4,12,028 crore to SGST from the IGST collected,” the finance ministry said in a statement.
Aditi Nayar, Chief Economist, Head Research and Outreach, ICRA Ltd, said, “With a continued double-digit growth, the CGST collections have exceeded the FY2024 RE, even as there is a modest shortfall in the GST compensation cess inflows, which are now being used to repay the loans undertaken during the covid period. With the CGST collections surpassing the FY2024 RE, the implicit growth needed to meet the Interim Budget Estimate for FY2025 has come down to single-digits, which appears likely to be exceeded.”
Showcasing a resilient economy
Tax experts stated that the record GST collection showcases the resilience of the Indian economy in a sea of uncertainty seen across both developing and developed countries. Saurabh Agarwal, Tax Partner, EY, said, “The March collection of Rs 1.78 lakh crore, representing the second-highest monthly total, signifies a robust economic trajectory for India. This achievement, marked by an impressive 11.5 per cent year-on-year growth, underscores the resilience of our economy in the face of global challenges. Furthermore, the annual gross revenue surpassing Rs 20 lakh crore, with a noteworthy 11.7 per cent increase, strengthens India’s position as a prominent player in the global marketplace. This consistent positive performance fosters confidence in our fiscal policies, which demonstrably drive sustainable growth.”
Further, higher collection as posted for the month of March is expected to help the government meet its fiscal target. Shravan Shetty, Managing Director, Primus Partners, said, “The growth of 11.5 per cent is in line with the growth estimated in the budget for the coming year. Maintaining this growth in the coming months will help the government meet its fiscal target. Fiscal prudence combined with record reserves will provide stability to the rupee and increase India’s attractiveness as a stable, high-growth economy in a sea of uncertainty seen across both developing and developed countries.”
Contribution from states & UTs
An important highlight of the data released by the ministry was the growth in collection across states and UTs. Applauding the contribution by the states, Ankur Gupta, Practice Leader Indirect Tax, SW India, said, “The diversification of contributions from states beyond the traditionally dominant ones like Maharashtra, Gujarat, Karnataka, and Tamil Nadu is a positive sign. This indicates the broader spread of economic activities across the country, driven by initiatives like Make in India and the Production-Linked Incentive (PLI) scheme. It’s encouraging to see other states making substantial contributions to GST collections, which reflects the success of these initiatives in fostering manufacturing and business activities in various regions.”
Increased compliance among taxpayers
The increased GST collection, experts stated, also underscores the collaborative effort between taxpayers and tax authorities in fostering a conducive tax environment for sustainable growth. Gunjan Prabhakaran, Partner & Leader, Indirect Tax, BDO India, said, “The healthy rate of growth of the GST collections on year-on-year basis reflects growth of the economy as well as improved compliance (aided by the various anti-evasion measures taken by the Government). Increase in the GST collections in FY24 is also aided by the payment of tax liability by the assessees against the notices issued by the tax authorities during FY24 for FY18 and FY19.
Furthermore, Ankur Gupta said that as the tax base expands and taxpayers demonstrate greater compliance, there is a potential for a reduction in scrutiny and routine notices. “This would be beneficial for businesses, as it would reduce the administrative burden and provide a conducive environment for ease of doing business,” he said. It is essential for tax administration to strike a balance between enforcement and facilitating compliance, ensuring that businesses can thrive while maintaining regulatory integrity.
“The noteworthy contribution of sole proprietors, who constitute a significant portion of tax filers, underscores their role in the economy. Their compliance with tax regulations demonstrates their commitment to contributing to the nation’s tax revenue and participating in formal economic channels,” added Ankur Gupta
Looking ahead, said Saurabh Agarwal, the prospects for heightened GST collections in the forthcoming quarter remain promising, particularly in light of the upcoming General Elections.
Harsh Shah reiterated, “There is a reasonable possibility of a further increase in the GST collections in the first quarter of FY 2025, given the general elections. One also shouldn’t be surprised, if the target for FY 2025 is increased at the time of announcement of the main Budget post the elections.”
Source:- Financial Express