Improved compliance coupled with a spur in economic activity pushed GST collection to ₹1.78-lakh crore in March, the Finance Ministry reported on Monday. It is 11.5 per cent higher than March 2023 collection number of ₹1.60-lakh crore.

This is the second all-time high collection after ₹1.87-lakh crore in April last year. Collection in March is related with goods consumed and services availed in February. Since GST was first rolled out, April has consecutively registered record collection.

The Finance Ministry highlighted that FY 24 marks a milestone with total gross GST collection of ₹20.18-lakh crore, an 11.7 per cent increase compared to the previous year. The average monthly collection for this fiscal year stands at ₹1.68-lakh crore, surpassing the previous year’s average of ₹1.5-lakh crore. GST revenue net of refunds as of March 2024 for the current fiscal year is ₹18.01-lakh crore, which is a growth of 13.4 per cent over same period last year.

Growth drivers

Experts felt that higher collection in March is on account of a combination of factors. M S Mani, Partner with Deloitte India said the latest collection demonstrates economic resurgence across sectors. It was possible due to the various measures taken by the GST authorities to improve compliance and stamp out evasion.

“The big focus on comparison of taxpayer behavior across tax and corporate databases has also made business convinced about the need to be compliant not only on their activities, but also keep track of their vendors tax behavior and ensure that the entire value chain becomes compliant,” Mani said.

Resilience of economy

Some experts said it reflected the strength of the Indian economy. “The collection underscores the resilience of our economy in the face of global challenges. Furthermore, the annual gross revenue surpassing ₹20-lakh crore, strengthens India‘s position as a prominent player in the global marketplace,” said Saurabh Agarwal, Tax Partner with EY India.

One important highlight was growth in collection across States and UTs. According to Ankur Gupta, Practice Leader Indirect Tax at SW India, the diversification of contributions from States beyond the traditionally dominant ones such as Maharashtra, Gujarat, Karnataka and Tamil Nadu is a positive sign. “This indicates the broader spread of economic activities across the country, driven by initiatives like Make in India and the Production-Linked Incentive (PLI) scheme,” he said.

Higher collection is expected to help the Centre do well on fiscal front and also ease in regulatory measures. Shravan Shetty, Managing Director at Primus Partners, said the latest number is in line with the budget estimate. “Maintaining this growth in the coming months will help the government meet its fiscal target. Fiscal prudence combined with record reserves will provide stability to the rupee and increase India’s attractiveness as a stable, high-growth economy in a sea of uncertainty seen across both developing and developed countries,” he said.

Adding to this, Gupta said as the tax base expands and taxpayers demonstrate greater compliance, there is a potential for reduction in scrutiny and routine notices. “This would be beneficial for businesses, as it would reduce the administrative burden and provide a conducive environment for ease of doing business,” he said.