Goods and Services Tax (GST) collections rose 55.8% year-on-year to Rs 1,44,616 crore in June (for sales in May), the second highest level since the rollout in July 2017 of the indirect tax system, according to data published by the Ministry of Finance. The economic recovery, anti-evasion activities, in particular actions against false billers, as well as the impact of inflation contributed to the rise in the GST.
Prior to that, GST collections had recorded an all-time high of Rs 1.68 lakh crore in April for year-end sales in March. This is the fifth time monthly collections have crossed Rs 1.40 lakh crore since the inception of the GST, and the fourth consecutive month since March 2022. GST collections in June 2021 stood at Rs 92,800 crore.
Speaking at the GST Day celebrations on Friday, Union Finance Minister Nirmala Sitharaman said that within five years of its rollout, the GST was showing its potential. “Gross GST revenue collection for the month of June is Rs 1,44,616 crore, an increase of 56% from the same month last year. So the trend that was talked about, we are now reversing it and showing that GST revenues remain above Rs 1.40 lakh crore. So Rs 1.40 lakh crore is the approximate result, we don’t go below that. We will stay above that,” she said.
She also said that the Central Board of Excise and Customs (CBIC) is open to suggestions from industry and that the tax arbitration that existed between states before the rollout of the GST has been removed. “GST has removed discretion to a large extent, there’s no way to seek rent…. But I would still say we should be better at removing even a small iota of discretion. If that’s the case, we should just make sure that the system is so transparent, that the whisper of allegation of discretion somewhere should be completely removed,” she said.
Higher GST revenue growth should ease revenue concerns for some states going forward, but states heavily dependent on the offset may find FY23 to be a tough year, experts said.
In accordance with the GST (Compensation of States) Act 2017, States were guaranteed compensation at the compound rate of 14%, beginning with 2015-2016 as the base year, for losses due to the implementation of the regime, for five years of its deployment. . This ended on June 30. The GST Council meeting held earlier this week made no decision on extending the compensation mechanism, despite requests from at least a dozen states.
June also saw the highest ever collection of compensation, at Rs 11,018 crore, since the implementation of the GST. “Collection in June 2022 is not only the second highest, but also broke the trend of being a weak collection month as seen in the past…coupled with the economic recovery, enforcement activities, in particular the action against false invoices, have contributed to the enhanced GST Gross cess collection this month is the highest since the introduction of the GST,” the statement from the Ministry of Finance said.
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The total number of e-way bills generated in May was 7.3 crore; it was 7.4 crores in April.
The average monthly gross GST collection for the first quarter of 2022-2023 was Rs 1.51 lakh crore, compared to the average monthly collection of Rs 1.10 lakh crore during the same period of the previous financial year. In June, receipts from the import of goods increased by 55% and receipts from domestic transactions (including the import of services) increased by 56%, compared to last year.
With the exception of Daman & Diu and Center Jurisdiction, which recorded a contraction, all other States/UTs recorded double-digit growth in GST generated, with Tamil Nadu, Maharashtra, Haryana and Uttarakhand in the lead.
Experts said action against tax evaders, including audit and analysis efforts, will help increase GST collections beyond budgeted figures.
“This implies a substantial hike of around Rs 1.2 trillion for the Government of India from its fiscal year 2023 budget estimate for CGST (Central GST) of Rs 6.6 trillion. The strong year-on-year growth of 56% in overall GST revenue in June 2022 benefits from the economic recovery, and was also boosted by the low base of the second wave of Covid-19 and the transmission of high commodity prices to the inflation of production. If GST collections increase at the projected rate of about 17% in fiscal year 2023, then many states may be able to weather the end of the GST offset period. However, some states whose revenue sources are relatively more dependent on GST offsetting may find fiscal year 2023 to be a particularly challenging year,” said CIFAR Chief Economist Aditi Nayar.
Abhishek Jain, Indirect Tax Partner, KPMG in India, said: “These consistent high recoveries indicate recovery from the pandemic and can also be attributed to inflation and the tight checks and balances put in place by the government. The collections should reassure both the Center and the States on the revenue front.