The Goods and Services Tax (GST) collection in March 2022 touched ₹1.42 lakh crore, the highest ever since.
The inception of the new indirect tax regime in 2017, highlighting the ongoing robust economic recovery, technology-based compliance and rationalisation of inverted duty structure.
This is the ninth month in a row that GST revenue crossed ₹1 lakh crore mark; the record collection of ₹1,42,095 crore in March is 15% higher than ₹1,23,902 crore achieved in the same month a year ago, according to government data. The previous record collection was ₹1,40,986 crore in January.
According to government data, total GST collections in the current financial year ended March 31 was, at a little over ₹14.8 lakh crore, 17.5% higher than the ₹12.2 lakh crore collected in 2019-20, a non-Covid year.
GST collections dipped below ₹1 lakh crore in only two months in 2021-22 – May 2021 ( ₹97,821 crore) and June 2021 ( ₹92,800 crore) – mainly due to the second wave of pandemic.
“The average monthly gross GST collection for the last quarter of the FY 2021-22 has been ₹1.38 lakh crore against the average monthly collection of ₹1.10 lakh crore, ₹1.15 lakh crore and ₹1.30 lakh crore in the first, second and third quarters respectively,” the union finance ministry said in a statement.
The numbers reflect the ongoing economic recovery. The Indian economy is expected to grow by 8.9% in 2021-22 according to the government’s second advance estimates, helping the economy expand to beyond its pre-pandemic level.
With around 97% of the population over the age of 14 years covered by at least one dose of the vaccine (over 80% has been fully vaccinated), and with all Covid-related restrictions removed (the pandemic is no loner classified a disaster under Indian law), life and work look set to return to normal in the new financial year, although rising commodity prices (especially of oil) could yet spoil India’s budgetary math.
“Coupled with economic recovery, anti-evasion activities, especially action against fake billers have been contributing to the enhanced GST.
The improvement in revenue has also been due to various rate rationalization measures undertaken by the [GST] Council to correct inverted duty structure,” the ministry stated. An inverted duty structure is a situation in which inputs are taxed at a higher rate than finished goods.
Experts said while the March collections were robust, they were uneven. Devendra Kumar Pant, chief economist of India Ratings & Research raised concerns over inter-state variation in collections.
“While collections grew over 15% for Punjab, Haryana, Odisha, Maharashtra and Andhra Pradesh in March 2022 for states such as West Bengal.
Jharkhand, Chhattisgarh, Madhya Pradesh, Tamil Nadu, Telangana, Rajasthan and Uttar Pradesh, growth was less than 10%. This suggests inter-state variation in consumption and investment growth and provides more support to states demand’ for continuation of GST compensation beyond five years,” he said.
“While statewise variations exist in terms of the growth in GST collections, it would be interesting to see an analysis linking the statewise GDP [gross domestic products] growth with the GST collections during the same period,” MS Mani, partner at Deloitte India said.