Record making in April continues this year too as collection from Goods & Services Tax (GST) crossed ₹2 lakh crore for the first time since the inception, Finance Ministry reported on Wednesday. Finance Minister Nirmala Sitharaman attributed ‘strong momentum in the economy and efficient tax system’ for this achievement.

Collection in April was over ₹2.10 lakh crore as against Rs 1.87 lakh crore a year ago, showing a growth of 12.4 per cent. Coincidently, previous all-time high was ₹1.87 lakh crore. Also, since 2018, all except one April has given all -time high collection and one of the reasons is inventory clearance.

Meanwhile, the Minister said all dues on account of Integrated Goods & Services Tax (IGST) have been settled. This IGST settlement of ₹91,907 crore is ₹4,413 crore more than the actual net IGST collections of ₹87,494 crore and stands settled by the Central Government. “There are NO DUES pending on account of IGST settlement to the States,” she said.

The Finance Ministry highlighted that while domestic transaction went up by over 13 per cent, import transactions were up be over 8 per cent. It may be noted that collection in April is related with goods consumed and services availed in March.

Experts feel consumption coupled with compliance boosted the collection.

“While some part of the increased collections is attributable to the financial year end upswing, it is also reflective of the significant improvements in GST compliance by businesses,” said M S Mani, Partner with Deloitte.

Adding to this Ankur Gupta, Practice Leader Indirect Tax at SW India said, “This notable surge in collections can also be traced back to the deadline for closing scrutiny and assessments of fiscal years 2017-18 and 2018-19.”

According to Vivek Jalan. Partner with Tax Connect, considering an inflation of 5 per cent and GDP growth of 7 per cent, there has been an average buoyancy of 1 per cent on an average per annum over the last seven years, which also have witnessed a two year unprecedented slump in terms of COVID-19 lockdowns.

Saurabh Agarwal, Tax Partner of EY feels very component of GST collection has contributed significantly. The CGST, SGST, IGST, and Cess segments have all demonstrated positive performance, further solidifying government’s fiscal position.

“The concerted efforts of the GST officials including zero tolerance for non-filers, coupled with rigorous measures to combat fake invoicing and the registrations has significantly bolstered GST collections in the state’s coffers,” he said.

Now, expectation is that collection with rise further. According to Partik Jain, Partner with PwC, with next wave of GST reforms expected after the formation of new Government, the growth may be further accelerated. 

“It may also enable the Government to take bolder decisions such as rate rationalization or bringing products such as ATF and natural gas under the GST ambit,” he said.

The Economy is thus getting set for a Big Bang Final Budget in July 2024 and looking towards bringing Alcohol, petrol, diesel and real estate under GST on the one hand and implementation of The Direct Tax Code replacing the Age Old Income Tax Act on the other hand alongwith implementation of the Global Minimum Tax, concluded Jalan.