Wednesday, 09 Oct, 2024
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Double-digit jumps in tax collections from major states such as Maharashtra, Karnataka, Uttar Pradesh, Madhya Pradesh, and Haryana highlight robust consumption in these areas. Also, the growth is bolstered by tax authorities’ efforts to enhance compliance and address evasion.
The Goods and Services Tax (GST) collections saw a slight deceleration in August, with growth easing to 10 per cent from July's 10.3 per cent, bringing in nearly Rs 1.75 lakh crore. However, net receipts growth plummeted to 6.5 per cent totalling Rs1.5 lakh crore in August, the second weakest performance of the financial year, down from 14.4 per cent in the previous month.
In July, the gross GST revenue reached Rs 1.82 lakh crore, compared to Rs 1.66 lakh crore in July 2023 and Rs 1.59 lakh crore in August 2023. For the current financial year (FY25), total GST collections have risen by 10.1 per cent to Rs 9.13 lakh crore, up from Rs 8.29 lakh crore during the same period in 2023. The August figures reflect transactions from July.
The August GST collections revealed notable state-wise variations that may merit closer examination. Large states such as Maharashtra, Karnataka, Uttar Pradesh, Madhya Pradesh, and Haryana posted double-digit growth in collections, reflecting strong consumption and the success of tax authorities in enhancing compliance and curbing evasion.
In contrast, the single-digit growth in states like Gujarat, Andhra Pradesh, and Tamil Nadu is likely to draw the scrutiny of tax authorities. Meanwhile, the positive growth in GST collections in regions such as Nagaland, Assam, Andaman & Nicobar, and Ladakh underscores the broader economic development taking place across India.
Official data revealed single-digit growth in GST collections for some key manufacturing states. Gujarat recorded a 6 per cent annualised growth in August 2024, reaching Rs 10,344 crore; Tamil Nadu saw a 7 per cent increase, bringing in Rs 10,181 crore; and Telangana experienced a 4 per cent rise to Rs 4,569 crore. Notably, Andhra Pradesh reported a year-on-year contraction of 5 per cent, with collections totalling Rs 3,298 crore in August 2024.
Several states saw robust growth in GST collections. Haryana recorded a 12 per cent year-on-year (YoY) increase, reaching Rs 8,623 crore, while Uttar Pradesh grew by 11 per cent to Rs 8,269 crore. Madhya Pradesh saw a 12 per cent rise to Rs 3,438 crore, Karnataka also experienced an 11 per cent increase to Rs12,344 crore, and Maharashtra led the pack with a 13 per cent jump, bringing in Rs 26,367 crore.
The double-digit increases in tax collections from large states like Maharashtra, Karnataka, Uttar Pradesh, Madhya Pradesh, and Haryana underscore strong consumption levels in these regions, supported by the tax authorities' initiatives to improve compliance and tackle evasion. More importantly, the single-digit growth in other major states such as Gujarat, Andhra Pradesh, and Tamil Nadu are likely to attract the attention of tax authorities.
Manipur saw the highest spike in GST collections at 38 per cent, though this was from a lower base of Rs 40 crore last August during a period of widespread unrest. Following Manipur, Delhi recorded a 22 per cent increase, Assam saw an 18 per cent rise, and Himachal Pradesh experienced a 14 per cent growth. Other states such as Odisha and Uttar Pradesh also exceeded overall GST revenue growth trends with an 11 per cent rise each.
Despite the decline in net GST revenue in August, driven by increased refunds, the sustained growth in gross GST collections signals a resilient economy. Also, the move towards self-reliance is reflected in the shift towards increased exports and decreased imports. Imports, however, still rose by 12.1 per cent to Rs 49,976 crore, surpassing the 9.2 per cent growth in domestic revenue, which totalled Rs 1.25 lakh crore.
Notably, the all-powerful GST Council meeting scheduled for September 9 is expected to address a potential overhaul of the GST regime. Key topics likely include streamlining GST rates and the gradual phase-out of the compensation cess, which is set to expire in March 2026.
The Council is poised to make a decisive call on a new tax rate structure, aiming to sustain current revenue levels while simplifying the tax system. A major challenge is to streamline the tax structure without imposing a heavier burden on consumers.
The existing four-slab GST rate structure—5, 12, 18, and 28 per cent, plus special rates of 0, 0.25, 1.5, 3, and 6 percent—is under review. Proposals to reduce this to three slabs are gaining traction.
