On the rise. GST mop-up tops ₹1.6-lakh cr on better compliance, consumption

Better compliance and improvement in consumption pushed Goods & Services Tax (GST) collection to ₹1.65-lakh crore last month.

Experts observed that the continuous buoyancy in GST collections make a good case for rate restructuring.

Collection in June was ₹1.61-lakh crore, while it was ₹1.49 lakh crore in July 2022.

This is for the fifth time monthly GST collection crossed the ₹1.6-lakh crore mark since the introduction of the tax on 1 July, 2017.

Last month’s collection included goods consumed and services availed in June and tax deposited in the subsequent month.

“The revenues for the month of July are 11 per cent higher than the GST revenues in the same month last year,” a statement from the Finance Ministry said on Tuesday. Further, during the month, the revenues from domestic transactions (including import of services) are 15 per cent higher than the revenues from these sources during the same month last year.

Experts listed compliance, consumption and action against evaders as reasons for higher collection.

“The progressive reduction in e-invoicing turnover limits accompanied by increase in number of State-wise GST audits have resulted in sustained increase in GST collections,” MS Mani, Partner with Deloitte, said.

“The past trend of six key States generating almost 60 per cent of the nationwide GST collections continues in the current month as well,” he added.

Parag Mehta, Partner with NA Shah Associates, said the strong GSTN network has ensured detection of tax evaders at early stages.

“The periodic clarifications on various issues on applicability of laws resulted in enhanced compliances, and higher collections,” he added.

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”Collections exceeding ₹1.6-lakh crore over the past few months indicate that there is an increased awareness among businesses that any non-compliance draws the attention of authorities,“ Mani said.

Mehta said that consumer spending on homes, cars, vacations, etc. during festivals in the next 2-3 months will ensure higher GST collections.

“Continuous increase in GST collections is a sign for the board to undertake rate rationalisation exercise for the benefit of consumers,” he added.

According to Divakar Vijayasarathy, Founder & CEO with DVS Advisors, what is heartening is that India is the only country on scale with reducing administrative costs and increasing tax revenues- with the recent reduction in e-invoicing thresholds, increasing clarity over contentious issues through proactive circulars and tightening gaps in the system with higher integration- gst collections are poised to grow both exponentially and consistently over the mid-term. Further “given the nature of India’s tax and market structure- expanding indirect tax base is less invasive, easier to implement and high on impact. India’s best days have just begun,” he said.

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