Thursday, 10 Oct, 2024
By: Yash Gupte
The data shows that the contribution of states to the GST collection is not equal and there is a lot of disparity in the revenue collection in different states. Image Source: IANS
In case of states, the top 10 states with highest GST revenues collected Rs 98,414 crore in April 2022 out of the total state collections of Rs 1,29,978 crore. This shows that the top 10 states collecting the highest GST revenues accounted for more than 75 percent of GST collection in April 2022.
The monthly Goods and Service Tax (GST) revenues exceeded the mark of Rs. 1.4 lakh crore for the twelveth straight month in a row as GST revenues were recorded at Rs 1.60 lakh crore in March 2023, the Finance Ministry said. The gross GST revenue collected in the month of March 2023 was Rs 1,60,122 crore of which Central Goods and Service Tax (CGST) was Rs 29,546 crore, State Goods and Service Tax (SGST) was Rs 37,314 crore, Integrated Goods and Service Tax (IGST) was Rs 82,907 crore. (Including Rs 42,503 crore collected on import of goods) and cess is Rs 10,355 crore (including Rs 960 crore collected on import of goods). It was for the fourth time that in the financial year 2022-23, the gross GST collection crossed Rs 1.5 lakh crore mark registering second highest collection since implementation of GST. The month of March witnessed the highest IGST collection ever.
The total gross collection for 2022-23 stands at Rs 18.10 lakh crore and the average gross monthly collection for the full year is Rs 1.51 lakh crore. FY 2022–2023 saw a 22 percent increase in gross GST revenues over the previous year. In comparison to the first, second, and third quarters, the average monthly collections of Rs 1.51 lakh, Rs 1.46 lakh, and Rs 1.49 lakh crore respectively, the average monthly gross GST collection for the last quarter of the FY 2022–23 was Rs 1.55 lakh crore.
Out of the gross revenue collection of Rs 1,60,122 crore in the month of March 2023, the share of states in the GST collection was Rs 1,16,659 crore. This shows that the states contributed around 75 percent to the total GST collection. But, the data shows that the contribution of states to the GST collection is not equal and there is a lot of disparity in the revenue collection in different states. For example, as the chart shows, Maharashtra remains top contributor to the GST collection in March 2023 followed by Karnataka, Gujarat, Tamil Nadu and Haryana.
Source: Ministry of Finance
Note: The GST collection figures in FY2022-23 does not include the monthly GST collection for the month of January 2023.
The chart shows that Maharashtra has continued to remain at the top spot in case of monthly GST collections. Maharashtra’s total GST collection (except January 2023) for the FY2022-23 stood at Rs 2,45,834 crore. Maharashtra was followed by Karnataka with a total GST revenue of Rs 1,11,499 crore in FY2022-23. Gujarat stood third after Maharashtra and Karnataka as the western coastal state collected Rs 1,04,212 crore as GST revenue in FY2022-23. In the month of April 2022, all the states and union territories collected Rs 1,29,978 crore as GST revenue out of the total collection of Rs 1,67,549 crore. In case of states, the top 10 states with highest GST revenues collected Rs 98,414 crore in April 2022 out of the total state collections of Rs 1,29,978 crore. This shows that the top 10 states collecting the highest GST revenues accounted for more than 75 percent of GST collection in April 2022. The analysis of the data by India Tracker further reveals that this is not only in the case of April but for each and every month in FY2022-23. The 10 states- Maharashtra, Karnataka, Gujarat, Tamil Nadu, Uttar Pradesh, Haryana, West Bengal, Delhi, Telangana and Odisha account for more than 75 percent of GST collection in 2022-23.
Also, it is interesting to observe the gap between the state with the highest GST collection and the state with second highest GST revenue. Maharashtra is the state with highest GST collection and Karnataka stands second. Looking at the GST collection in March 2023, Maharashtra’s collection stood at Rs 22,695 crore while Karnataka, the state with second highest GST collection contributed Rs 10,360 crore to the total collections. This shows the massive difference of about Rs 12,335 crore in the GST collections of Maharashtra and Karnataka. Now let us have a look at the difference between Maharashtra and the state with lowest GST collection in March 2023. The north-eastern state of Nagaland accounted for the lowest GST collection of Rs 58 crore in March. This shows the massive difference of Rs 22,637 crore in the GST collections of Maharashtra and Nagaland. After understanding the disparities in the GST revenues of states, one thing which comes to our mind is that what the reason behind this disparity is.
The reason behind the disparity is that GST is a consumption-based tax. So, higher the consumption in any state, higher the GST collection. Growth in consumption in a State would depend upon the sectoral composition of the States’ GSDP, per capita income and the propensity of the residents to consume. The per capita income of states dominate the trend of GST collections. Therefore the states with the highest per capita income of their population seem to have earned higher GST collections. During the FY2022–23, states with higher local consumption of higher-taxed commodities reported higher GST receipts. For instance, states like Maharashtra, Uttar Pradesh, Tamil Nadu, Karnataka and Gujarat recorded the highest registration of vehicles (taxed at 28 percent). This shows the higher consumption in these states of higher taxed goods.
The chart below takes a look at the GST collections in FY2022-23.
Source: Ministry of Finance
The GST revenue collection was lowest in June 2021 at Rs. 92,800 crore and the highest was recorded in the month of April in 2022 at Rs. 1,67,540 crore. The GST collection had decreased by around Rs. 27,000 crore in May 2022 as the GST revenue collection stood at Rs. 1,40,885 crore. It witnessed a gradual recovery in the months of June and July 2022 but again decreased by around Rs. 5000 crore to Rs. 1,43,612 crore in August 2022. The monthly GST collection crossed the mark of Rs 1.5 lakh crore in October 2022 and then in January 2023 when the GST collection was recorded at Rs 1,57,554 crore. The GST collection in March 2023 is second highest in FY 2022-23 and has crossed the mark of Rs 1.60 lakh for the second time since the inception of GST. The highest every monthly GST collection was reported in April 2022 at Rs 1,67,540 crore
The GST is a value-added tax applied on the majority of goods and services sold for domestic consumption. Consumers pay the GST, but businesses that provide products and services remit it to the government. GST is levied on the 'supply' of goods or services, as opposed to the prior concept of levy on the manufacture of things, the sale of goods, or the provision of services. The rates of CGST, SGST, and IGST are mutually agreed upon by the Centre and the States. The rates are announced based on the GST Council's suggestion. In May 2015, the GST (122nd Constitutional Amendment) Bill, 2014 was enacted. It was enacted as the Constitution (101st Amendment) Act, 2016, and went into force on September 16, 2016. The GST was implemented on July 1, 2017.
One of the other reasons behind the disparity in the GST collections across states is the difference in investments (public and private) made to them. Andhra Pradesh topped the chart by attracting 306 projects worth Rs 7,65,030 crore in FY2023. Gujarat stood second with 1,008 new projects worth Rs 4,44,420 crore. Another southern state, Karnataka, edged out Maharashtra, which finished second last year, to take third place. In FY2023, the state received 992 new projects totaling Rs 4,32,703.72 crore.
One of the anticipated effects of the GST regime was that wealthier, more industrialised states would 'lose out' to poorer states in a sense because commodities would be transferred out of them to consumers in another state and be taxed there. As it turns out, more industrialised states like Gujarat and Maharashtra also have large consumer bases made up of a relatively more affluent population, allowing them to 'capture' the tax within their state borders.
Source: Projects Today
In terms of the total number of new projects, Maharashtra continued to lead the states. Maharashtra attracted 1,639 new projects worth Rs 3,71,194.80 crore during FY2023. Odisha, Uttar Pradesh, Rajasthan, Tamil Nadu, Telangana, Madhya Pradesh, and West Bengal were among the other states that made it to the top 10 list. The top three states together accounted for 44.3 percent of the total fresh investment, even though the top 10 states accounted for 90 percent of the total fresh investment announced in the nation during FY2023. In addition, Andhra Pradesh, Karnataka, Gujarat, Maharashtra, and Odisha were the private sector's top picks for investment locations, in that order.
Speaking in 2018, just as the GST was about to be implemented, Arvind Subramanian, who was the chief economic adviser at the time, predicted that the introduction of the new tax would increase "convergence" between states. According to economists, this means that poorer states will eventually close the economic gap with their wealthier counterparts by growing more quickly than richer states. But drawing a comparison of states based on GST collections, it is evident that the so called ‘poorer states’ have not been able to bridge the gap with their wealthier counterparts.
Source: Ministry of Finance
Note: The GST collection figures in FY2022-23 does not include the monthly GST collection for the month of January 2023.
Among the five large states with the lowest GST collection, Assam has registered the lowest GST collection of Rs 12,464 crore in FY2022-23 followed by Bihar with Rs 15,095 and Uttarakhand with a GST collection of Rs 15,335 crore. In the month of April 2022, all the states and union territories collected Rs 1,29,978 crore as GST revenue out of the total collection of Rs 1,67,549 crore. In case of states, the bottom 5 states with lowest GST revenues collected Rs 9,354 crore in April 2022 out of the total state collections of Rs 1,29,978 crore. This shows that the bottom 5 states collecting the lowest GST revenues accounted for less than 8 percent of GST collection in April 2022.
Source: Ministry of Statistics and Programme Implementation
Taking a look at the states with highest per capita income reveals that these are the states with highest GST collections in FY2022-23 and it thus becomes clear that higher the income, higher is the spending capacity and consumption and ultimately higher the GST collection. Therefore, states with the highest per capita income account for highest GST collections.
