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Explained: Why GST collection has surged, what the trend indicates

GST collection in October rose to Rs 1,30,127 crore, the second highest since the rollout of the tax regime in July 2017.

GST collections at Rs 1,41,384 crore in April this year, accounting for year-end sales, are the highest collections so far in the indirect tax regime. (File)

Gross revenue collections of Goods and Services Tax (GST) in October (for sales in September) rose 23.7 per cent year-on-year to Rs 1,30,127 crore. This is the second-highest revenue collection under GST ever since its rollout in July 2017, coming on the back of a pickup in economic activity and several compliance measures taken by tax authorities to curb evasion.

At Rs 1,41,384 crore in April this year, accounting for year-end sales, GST collections are the highest so far in the indirect tax regime.

How have the different GST components done?

Of the Rs 1,30,127 crore collected in gross GST revenue in October, Central GST is Rs 23,861 crore, State GST is Rs 30,421 crore, Integrated GST is Rs 67,361 crore (including Rs 32,998 crore collected on import of goods) and cess is Rs 8,484 crore (including Rs 699 crore collected on import of goods).

The government has settled Rs 27,310 crore to CGST, and Rs 22,394 crore to SGST from IGST as regular settlement. The total revenue of the Centre and the states after regular settlements in October is Rs 51,171 crore for CGST and Rs 52,815 crore for SGST.

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Finance Minister Nirmala Sitharaman said in a tweet: “GST collection for October 2021 registered the second-highest since the implementation of GST Rs 1,30,127 crore gross GST revenue collected in October. Revenues… of October 2021 are 24% higher than the GST revenues in the same month last year & 36% over ’19-20.”

Chart 1. Source: Ministry of Finance

What does the trend indicate?

Chart 1 shows the trends in GST collections during the current calendar year. GST revenues have picked pace, with a 24-per-cent year-on-year growth and a 36-per-cent growth over the pre-pandemic period of 2019-20. The Finance Ministry said this growth in collections is “very much in line with the trend in economic recovery”.

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“The GST revenues for October have been the second-highest ever since the introduction of GST, second only to that in April 2021, which related to year-end revenues. This is very much in line with the trend in economic recovery. This is also evident from the trend in the e-way bills generated every month since the second wave. The revenues would have still been higher if the sales of cars and other products had not been affected on account of disruption in supply of semiconductors,” it said.

Data released by the Finance Ministry also showed that timely payment of taxes has been increasing compared with previous months (Chart 2).

Chart 1. Source: Ministry of Finance

Out of the total returns filed, the share of returns for the current period filed in every month has increased. In July, 1.5 crore returns were filed as taxpayers had filed returns of past months due to deadline extensions given due to Covid.

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What are the measures being taken to ensure higher compliance?

State and Central tax authorities have been taken measures to ease compliance, such as nil filing through SMS, enabling a Quarterly Return Monthly Payment (QRMP) system and auto-population of return, the Ministry said. The tax authorities have also taken steps to block e-way bills for non-filing of returns, system-based suspension of registration of taxpayers who have failed to file six returns in a row and blocking of credit for return defaulters.

For GST revenues collected in the respective regions, Maharashtra posted a 23-per-cent growth in GST revenues in October, Tamil Nadu 11 percent, Gujarat 25 per cent, and Karnataka 18 per cent.

Tax experts said the uptrend is likely to continue in coming months due to the festive season. Abhishek Jain, Tax Partner, EY India, said, “The robust GST collections are quite encouraging and a clear sign of economic recovery. With the ongoing festive season, we can expect similar or even higher GST collections in the coming months.”

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First published on: 01-11-2021 at 03:36:03 pm
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