Finance Minister Nirmala Sitharaman today presented the interim budget in the parliament. This budget was Sitharaman’s sixth budget in a row and the last one before the 2024 Lok Sabha elections. The withdrawal of outstanding tax demands was announced by Finance Minister Sitharaman. One crore taxpayers stand to gain from the action. In a cautious move, the FM decided to maintain the current tax rates, including import duty, in the interim Budget 2024. Nonetheless, certain tax exemptions for specific IFSC units and startup-related perks that expire in March will be extended until March 2025.
On indirect taxes, the Union Minister for Finance & Corporate Affairs Nirmala Sitharaman said that GST has reduced the compliance burden on trade and industry by unifying the highly fragmented indirect tax regime in India. In her Interim Budget speech, the Minister highlighted the fact that tax base of GST has more than doubled and average monthly gross GST collection has almost doubled to Rs. 1.66 lakh crore this year. She also said that in the last 5 years the Government’s focus has been to improve tax-payer services which has led to transformation of age-old jurisdiction-based assessment system, and filing of tax returns has been made simpler and easier.
Talking about the GST collection, the gross GST collection in the month of January 2024 is Rs 1,72,129 crore which shows a 10.4 percent Year-o-Year (Y-oY) growth over the revenue of Rs 1,55,922 crore collected in January 2023. From the IGST collection, the government has remitted Rs 43,552 crore to the CGST and Rs 37,257 crore to the SGST.
The cumulative gross GST collection from April 2023 to January 2024 increased by 11.6 percent year over year (till 5:00 PM on January 31, 2024), to Rs 16.69 lakh crore, compared to Rs 14.96 lakh crore over the same time the previous year (April 2022–January 2023).
The introduction and implementation of Goods and Service Tax marked was a turning point in India’s history of taxation. In a diverse and federal nation like India, where many tax laws were unified into a single system, the adoption of this complete system was especially noteworthy.
Source: Ministry of Finance
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.
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 2023 at Rs. 1,87,035 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 chart also shows better trends of GST collection in the current financial year as compared to FY2022-23. The GST collection in April 2023 was Rs 1,87,035 crore as compared to Rs 1,67,540 crore in April 2022. A similar trend was witnessed during the months of May and June. In October 2023, the GST collection was Rs 1,72,003 crore as compared to Rs 1,51,718 crore in October 2022.
In a written reply to a question in Lok Sabha on July 31, 2023, Minister of State for Finance, Pankaj Chaudhary mentioned that the monthly average gross GST collection for the FYs 2021-22 & 2022-23 have shown 30 percent and 22 percent year on year growth respectively. The Minister added that GST is paid on a self-assessment basis and that tax administration at the federal and state levels is authorised to take enforcement action in cases of underpayment and nonpayment of GST. The detection of such instances and the recovery of unpaid or underpaid taxes are ongoing processes. He further mentioned that the government, on the recommendations of the GST Council, has been bringing several reforms in GST. These measures would improve the GST compliance and increase the GST collection.
GST collections have been steadily increasing, according to Tax Connect Advisory Partner Vivek Jalan. They have almost doubled from an average of about Rs 0.85 lakh crore in FY17–18 to almost Rs 16.5 lakh crore in FY2023–25. According to Jalan, the fact that the taxpayer base is expanding signifies that the biggest tax reform in Indian history has stabilized. Expert perspectives generally agree that these strong GST revenues indicate both the successful stabilization of the Indian GST regime and solid economic activity.
MS Mani, Deloitte India Partner was confident about the tax collection targets being comfortably met during this financial year. He said, “The GST collections are in line with the other macroeconomic parameters, which indicate a significant uplift in economic activities, with even the IMF upgrading the growth forecast to 6.7 percent for FY23-24. The same collection trajectory in the next two months will ensure that the tax collection targets for the year are comfortably surpassed."