Average monthly collection of GST is expected to reach ₹1.6-lakh crore or even more in FY24, Budget data showed. On the basis of RE, it is around ₹1.4-lakh crore during FY23. Experts believe that going by the current trend, coupled with co-ordinated policy action, even higher collections are possible.

The Budget has estimated collection through CGST (Central Goods & Services Tax) including Compensation Cess for entire FY24 at ₹9.6-lakh crore — 12 per cent higher than the revised estimate of FY23 which is ₹8.5-lakh crore. Extrapolating both the estimates for SGST (State Goods & Service Tax), average monthly collection to achieve FY24 target can be pegged at ₹1.6-lakh crore against ₹1.4-lakh crore for FY23 (RE).

During FY23, GST collection in the first 10 months were encouraging with the all-time high monthly collection touching ₹1.68-lakh crore in April and second all-time high of ₹1.56-lakh crore in January. So far, in the first ten months, average monthly gross collection has been ₹1.49-lakh crore, higher than the requirement of achieving revised estimate in FY23.

Three factors — recovery in economy, expansion of tax base, and improvement — contribute to better collection. In the Oct-Dec 2022 quarter, total 2.42 crore GST returns were filed compared with 2.19 crore in the same quarter last year. Similarly, percentage of filing of GST returns (GSTR-3B) and of the statement of invoices (GSTR-1), till the end of January reached 89.5 and 87.3 per cent, respectively against 77 and 59.2 in FY20.

Precise data needed

Harpreet Singh, Partner with KPMG India, felt increase in spending by middle class, supply chain efficiencies, adoption of digital payments, seamless tracking of transactions through e-invoice and e-way Bill reporting, etc are some of the key factors contributing to better tax collections.

Similarly, MS Mani, Partner at Deloitte India, said growing number of audits at the state level together with the large volume of precise data on taxpayers provided by the GSTN is ensuring robust tax administration leading to higher collections.

On what the government should do to accelerate the pace of collection, Singh said: “Consolidation of tax slabs to achieve fewer rates, lesser compliances by merging two monthly returns into one, use of data analytics under ADVAIT project to study tax trends for assistance in GST Audits, etc are some of the key initiatives that can result in increased tax base and resultant higher tax collections.”

Mani said the government should continue its focus on increasing the base of GST taxpayers by sourcing data from various other databases on economic activities performed by various businesses. In addition, “since GST is essentially a consumption based tax, all steps taken to increase consumption of goods and services, would result in a significant increase in the collections,” he suggested.