Fin min official sees GST mop-up touching record 2 trln rupees in Apr
Informist, Tuesday, Apr 2, 2024
--Fin min source: GST mop-up seen over 2 trln rupees in Apr
--Fin min source: GST mop-up seen up 12-13% on month in Apr
--CONTEXT: Mar GST mop-up 1.78 trln rupees, up 11.5% on year
--Fin min source: See FY25 avg monthly GST mop-up 1.85-1.90 trln rupee
By Priyasmita Dutta and Sagar Sen
NEW DELHI - India's goods and services tax collections are likely to touch a record 2 trln rupees in April, a jump of 12-13% from the March number, a senior finance ministry official said. A back of the envelope calculation shows that a 12-13% sequential growth will take GST collections in April to 2.00-2.02 trln rupees.
The robust collections are expected on the back of better compliance systems and growth in the economy, the official told Informist. "The system is efficient," the official said. "Out of a 12-13% growth in collections every month, roughly 5% is due to the inflation factor, 7% is the GDP factor and, add another 1% which is the buoyancy factor," the official said.
Data released on Monday showed India's GST collections grew 11.5% on year to 1.78 trln rupees in March, the second-highest monthly collections ever. Data for GST mop-up in April will be released on May 1.
The Reserve Bank of India has projected India's GDP to grow 7.0% and retail inflation to average 4.5% in 2024-25 (Apr-Mar) and the Interim Budget has projected tax buoyancy in 2024-25 at 1.1. Tax buoyancy refers to the change in a country's tax revenue growth with respect to the change in its nominal GDP. A tax buoyancy rate of over one means growth in tax collections is faster than nominal GDP growth.
Though the robust growth in GST collections will sustain in the new financial year started Monday, a collection of over 2 trln rupees in absolute terms on a monthly basis is a tall task, the official said. Barring the two pandemic years, GST collections in April are usually the highest in each financial year owing to healthy year-end domestic transactions.
The GST collections are expected to average 1.85-1.90 trln rupees per month in 2024-25, the official said. In 2023-24, average monthly GST collections were 1.68 trln rupees. Average monthly GST collections of 1.85-1.90 trln rupees would mean a year-on-year growth of 10.1-13.1%. The Interim Budget has projected the Centre's share in GST collections to rise 11.6% on year in 2024-25. The total GST collections, excluding cess, is roughly divided equally between the Centre and states.
The government has been trying to make amends in the GST system to contain evasion and weed out fake and incorrect invoicing, and the impact is likely to be reflected in the healthy growth in GST collections in 2024-25 as well, the official said. "GST collections will continue to improve as it is directionally right...is transparent and driven by data," the official said. End
