GST mop-up rises 12% to Rs 1.57 trillion in May despite external headwinds

Strong increase in line with GDP growth estimate in FY24, say experts

Goods and services tax (GST) collection in May rose 12 per cent over the same month last year to Rs 1.57 trillion, indicating that the economy is holding firm despite external headwinds. Experts anticipate GST would expand 10-11 per cent in this fiscal year, in step with the government’s growth estimate of 6.5 per cent.

With this, gross GST has crossed Rs 1.5 trillion for the fifth time since the inception of the indirect tax regime, making it a new base for this fiscal year. Monthly GST reported more than Rs 1.4 trillion for 14 months in a row.

“GST revenues in May have modestly exceeded our expectations. Over the next few months, we expect GST to print at Rs 1.55-1.65 trillion and record an expansion of 10-11 per cent in YoY terms, broadly in line with the nominal GDP growth expected in FY24,” said Aditi Nayar, chief economist, ICRA.

During the month, revenues from imports of goods were 12 per cent higher and those from domestic transactions (including imports of services) were 11 per cent more than the equivalent figures during the same month last year, the finance ministry said while releasing the provisional numbers on Thursday.

In April, GST reported a record high of Rs 1.87 trillion. The moderation in the May number is primarily on account of fiscal-closure activities getting accumulated and accounted for in April.

“While collection in absolute terms is lower than in April, which had an embedded year-end impact, it reflects a continuation of the inherently good economic performance across states,” said M S Mani, tax partner, Deloitte India. 

Of the gross GST collected in May, central GST is Rs 28,411 crore, state GST Rs 35,828 crore, integrated GST Rs 81,363 crore (including Rs 41,772 crore on imports of goods), and the cess is Rs 11,489 crore (including Rs 1,057 crore collected on imports of goods).

The Centre has settled Rs 35,369 crore for CGST and Rs 29,769 crore for SGST from IGST. After the regular settlement it is Rs 63,780 crore for CGST and Rs 65,597 crore for the SGST, according to the ministry. The overall growth of 12 per cent is also well reflected in state-wise collection.

Maharashtra, Gujarat, Karnataka, and Tamil Nadu clocked the highest collection because these states have a large corporate base and attract most of the investments that come to India.

For instance, Maharashtra reported a growth rate of 16 per cent, Delhi 25 per cent, Karnataka 12 per cent, Gujarat 5 per cent, and Andhra Pradesh 11 per cent.

“Collection reflects the efforts of state governments and ease of business operations,” said Ankur Gupta, practice leader (indirect tax), SW India.

The majority of the states are reflecting double-digit growth barring a few like Punjab (which is negative), Rajasthan, and West Bengal. Lower investment in these states can be one of the reasons for this, Gupta said.