April’s monthly collections for Goods and Services Tax (GST) – they track tax collections for the month of March – have come at an all-time high of ₹1.87 lakh crore. While part of the increase is just seasonality – March generally sees a higher tax collection because it is the last month in the fiscal year – it cannot be denied that the GST regime has overcome its initial teething troubles and revenue shortfall anxieties. HT reported on April 12 that the government is expecting GST collections for 2023-24 to cross the ₹20 trillion (lakh crore) mark.
What are the key takeaways from the latest GST collection number? Three things can be listed.
A healthy growth in GST collections, when read with other indicators such as the Purchasing Managers’ Index (PMI) manufacturing for the month of April reaching a four-month high suggests that the Indian economy is still not losing momentum. This is good news at a time when the global economy is facing a lot of uncertainties. The government has been claiming that improvement in compliance has played a big role in giving a boost to GST collections. It will be interesting to see the future growth pattern in GST, especially its share in total GDP, to ascertain the importance of this factor as an inflationary boost to GST collections weakens going forward.
While it is heartening that GST revenues have stabilised, there is a strong case to argue that simplifying GST, especially in terms of number of tax slabs, is still a work in progress. Ideally, the GST Council must now shift attention to this larger task at hand. While there is good reason to believe that this process will not start before the 2024 elections, it is a task which must be finished as soon as possible.
