On Monday, the Indian finance ministry data showed that India’s goods and services tax (GST) collection for April hit an all-time high of Rs 1.87 trillion, up 12% year-on-year. The robust collection was mainly driven by better compliance through data analytics, sustained economic growth, and a boost in year-end sales. The prime minister, Narendra Modi, hailed the news as “great news for the Indian economy,” and tweeted that rising tax collection despite lower tax rates demonstrates the success of GST in increasing integration and compliance.
According to the data, of the gross GST collection, Central GST stood at Rs 38,440 crore, SGST at Rs 47,412 crore, IGST at Rs 89,158 crore (including Rs 34,972 crore collected on import of goods), and cess at Rs 12,025 crore. After the settlement of interstate transactions, the Centre collected Rs 84,304 crore as Central GST, while states collected Rs 85,371 crore as SGST. The GST cess on high-end products, tobacco, and aerated drinks fetched Rs 12,025 crore, which goes to repaying the liquidity support extended to states during the pandemic in lieu of their GST compensation.
The finance ministry noted that the record GST collection was due to the transactions during March, the closing month of FY23, where organizations were keen to close the fiscal year on a high note. M S Mani, partner at Deloitte India, said that a majority of large states reported a 20% plus growth over the same period last year, indicating broad-level growth across sectors and states. In April, Maharashtra, Karnataka, and Uttar Pradesh registered more than 20% annual growth in GST revenue, while Punjab and Tamil Nadu posted 16% and 19% growth, respectively. Delhi reported an 8% annual growth.
The ministry said that for the first time, gross GST collection had crossed the Rs 1.75-trillion mark. The total number of e-way bills generated in March 2023 was 90 million, 11% higher than the 81 million e-way bills generated in February 2023. E-way bill generation is the process of generating electronic permits for goods transportation within and across states. Aditi Nayar, Chief Economist at ICRA, said that while collections had maintained a healthy 11-13% growth in recent months, a normalizing base and some cooling of inflation may moderate the pace of expansion slightly in the coming quarter, although it would remain in the high single digits.
Saurabh Agarwal, tax partner at EY LLP, said that tax collections continue to show a positive trend as the government uses end-to-end data analytics to ensure effective administration, and the increased collections are likely an indicator of a stable growth in the Indian economy.
