GST mop-up at record high, surges to Rs 1.15 trillion in December

Signalling an economic revival, goods and services tax (GST) collection touched a record high in December, posting growth of 11.6 per cent year-on-year (YoY) and surpassing the Rs 1-trillion mark for the third straight month, the official data showed on Friday. The double-digit expansion in collection could partially be attributed to the government’s drive against GST evaders and fake bills, besides tighter compliance measures. However, some economists credited it to the festival season sales.

GST collection stood at Rs 1.15 trillion in December as against Rs 1.05 trillion in the previous month, the data released by the finance ministry showed. Before this, the highest GST collection was Rs 1.14 trillion in April 2019. 

The collection rose for the fourth consecutive month in December, indicating the reinstatement of normalcy in economic activity after months of disruption caused by the Covid-19 lockdown. The latest numbers mostly account for transactions done in November and hence represent the impact of the festival season.

“The sharp growth in GST collection in December, while enthusing, is driven by the festive season sales and, therefore, may moderate in the subsequent months,” said Aditi Nayar, principal economist, ICRA Ratings.

During the month, revenues from the import of goods posted 27 per cent growth, while that from domestic transactions (including the import of services) grew by 8 per cent compared to the same month last year.  “A significant jump in GST on imports could indicate a revival in demand on high-end products such as cell phones and electronic items,” said Pratik Jain, partner, PwC India. 

He added that apart from the economic revival, the growth could be on the back of tightening compliances with measures such as e-invoicing and increased investigations to catch tax evaders, “even though GST audits for 2017-18 and 2018-19 are yet to start in a big way”. 

The government in October introduced the e-invoicing mechanism for firms with a turnover of Rs 500 crore and above. An anti-evasion measure, e-invoicing will be extended to entities with turnover of Rs 100 crore from Friday. The government has also made registration norms more stringent while tightening the rules for using tax credits recently.

GST collection had crossed the Rs 1-trillion mark in seven of the 12 months in the last fiscal year.

All the segments of GST collection yielded more in December compared to November. For instance, CGST collection rose to Rs 21,365 crore as against Rs 19,189 crore, and SGST mop-up increased to Rs 27,804 crore as against Rs 25,540 crore. Also, integrated GST receipts were more at Rs 57,426 crore as against Rs 51,992 crore, and compensation cess at Rs 8,579 crore as against Rs 8,242 crore.

"It is the first time that it has crossed Rs 1.15 trillion,” the finance ministry said in a statement on Friday. 

Talking about the previous high, the ministry said the revenues of April normally tend to be high since they pertain to the returns of March, which marks the end of a financial year.

The month-on-month growth is the highest in the last 21 months, the ministry said.

"This has been due to the combined effect of the rapid economic recovery post pandemic and the nationwide drive against GST evaders and fake bills along with many systemic changes introduced recently, which have led to improved compliance,” it said.

Average growth in GST revenues during the third quarter of 2020-21 has been 7.3 per cent as compared to (-) 8.2 per cent during the second quarter and (-) 41.0 per cent during the first quarter, the ministry said.

Abhishek Jain, partner at EY, said, “GST collection crossing Rs 1.15 trillion for the first time ever, despite the fact that we are not completely out of the pandemic, indicates a remarkable recovery in the economy.”

The number of GSTR-3B returns filed for December was 8.7 million compared to 8.2 million filed in October.

Around 11 states and Union Territories posted a double-digit expansion in collection on account of domestic transactions in December, while some including Chandigarh, Delhi, Himachal Pradesh, and Goa witnessed a decline.