August GST mop-up rises 28% to Rs 1.43 lakh crore

The recovery, alongside better compliance amid enforcement actions to curb evasion, also bolstered mop-up. Further, the collections gained as revenues from import of goods were 57 per cent higher, while that from domestic transactions (including import of services) were 19 per cent higher. Cess from sin/luxury goods such as automobiles, tobacco and aerated drinks recorded a 6.8 per cent decline over last month, which experts said indicates a lower demand for such goods.

Monthly GST revenues have been over the Rs-1.4 lakh crore mark for the last six months. The Finance Ministry said the year-on-year growth in revenues during April-August is 33 per cent, continuing to “display very high buoyancy”. “This is a clear impact of various measures taken by the Council in the past to ensure better compliance. Better reporting coupled with economic recovery has been having a positive impact on the GST revenues on a consistent basis.”

E-way bills, used in interstate transactions, also picked up. During July, 7.6 crore e-way bills were generated, slightly above 7.4 crore in June and 19 per cent higher than 6.4 crore in July 2021.

Pursuant to decisions taken in the 47th GST council meeting, GST exemption was withdrawn from ‘pre-packaged and labelled’ retail packs which include food items such as curd, lassi, puffed rice, wheat flour, buttermilk, but items sold loose or unlabelled continue to remain exempt. Pre-packaged and pre-labelled food items such as grains, curd, lassi, paneer, jaggery, wheat flour, puffed rice, buttermilk and meat/fish (except fresh and frozen) are now taxed at 5 per cent, at par with branded items.

Moreover, correction of inverted duty structure translated into a rate hike for household items such as LED lamps, printing/drawing ink, power driven pumps, Tetra Pak to 18 per cent from 12 per cent, and for solar water heaters, finished leather to 12 per cent from 5 per cent.

Experts said despite a sequential dip, GST revenues are strong with a pickup in economic activity and are expected to improve going ahead with the onset of the festive season.

“These collections certainly reflect the strength of the underlying economic factors as they have established a new normal of Rs 1.4 lakh crores. With the onset of the festival season, which is typically a large consumption driver for all businesses, the GST collections in the coming months would also be expected to be robust,” MS Mani, partner, Deloitte India said.

Abhishek Jain, partner—indirect tax, KPMG in India, said, “The consistent high collections indicate upward economic trajectory despite fluctuating COVID cases and to some extent attributable to inflation and better compliance being ensured by the government.”

At least 16 states/UTs recorded a higher than 20 per cent growth in GST collections in their regions even though most remained below the national growth rate of 28 per cent. Experts said collections are likely to overshoot the budgetary targets set for this fiscal.

“While the absolute GST collections displayed a mild sequential dip in August 2022, the YoY growth rate remained at an impressive 28% reflecting the revival in consumption, improved compliance as well as elevated inflation. Looking ahead, the YoY growth in GST collections is likely to remain well above 20% in September 2022, before tempering down to 12-15% in Q3 FY2023, on a normalising base, trending close to the nominal GDP expansion. We continue to foresee a considerable upside in the CGST collections relative to the FY2023 BE, more than offsetting the expected loss in excise collections,” ICRA chief economist Aditi Nayar said.

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After the end of the compensation regime for states in June 2022, the higher GST revenue growth is expected to ease the revenue concerns for some states going ahead, but states with a heavy dependence on compensation may have to step up their enforcement actions to improve compliance.

Of the gross GST revenue of Rs 1,43,612 crore, CGST — the tax levied on intra-state supplies of goods and services by the Centre — is Rs 24,710 crore and SGST — the tax levied on intra-state supplies of goods and services by the states — is Rs 30,951 crore, the Ministry said. IGST — tax levied on all inter-state supplies of goods and services — is Rs 77,782 crore (including Rs 42,067 crore collected on import of goods) and cess Rs 10,168 crore (including Rs 1,018 crore collected on import of goods), it said. The Centre has settled Rs 29,524 crore to CGST and Rs 25,119 crore to SGST from IGST. The total revenue of Centre and the states in August after regular settlement is Rs 54,234 crore for CGST and Rs 56,070 crore for SGST, the Ministry said.

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