GST receipts decline to three-month low but hold on to Rs 1.65 trn in Dec

Goods and services tax (GST) collection in December declined to a three-month low due to economic activities winding down after Diwali but remained elevated at Rs 1.65 trillion. 
 

The growth rate year-on-year fell to a three-month low of 10.3 per cent over Rs 1.49 trillion in December 2022-23. GST collection in a particular month is on account of production, sales, and purchases in the previous month.

Thus, collection in December pertained to transactions in November, which was marked by holidays after Diwali, slowing receipts.

The same trend was visible in other data points such as the core sector, which witnessed a six-month low growth rate of 7.8 per cent in November.

GST collection has been Rs 1.65 trillion and above for six months of the nine this financial year. It did not fall below Rs 1.57 trillion in any month.

Average monthly gross GST collection -- Rs 1.66 trillion in the first nine months -- represents a 12 per cent rise over the Rs 1.49 trillion recorded in the corresponding period of FY23.

“While GST collection is slightly lower than what was seen last month, the consistent mark above Rs 1.6 trillion provides large fiscal confidence,” said Abhishek Jain, partner and national head (indirect tax), KPMG.

Central GST (CGST) after the integrated GST settlement stood at Rs 70,501 crore in December, the third highest in the nine months, after April and October.

With this, CGST yielded Rs 6.26 trillion during April-December -- 77 per cent of the Rs 8.12 trillion estimated in the Budget Estimates (BE) for 2023-24.

With three more months remaining this financial year, CGST collection is likely to exceed the Budget Estimate. After 42 per cent devolution to the states, CGST receipts, together with robust direct tax collection, would provide enough tax revenues to the government to bring its fiscal deficit to the budgeted 5.9 per cent of gross domestic product.

This is likely to happen despite dwindling disinvestment receipts and expected higher revenue expenditure due to various subsidies.

The earlier data showed direct tax collection after refunds grew 20.66 per cent to Rs 13.7 trillion till December 17 this financial year, accounting for a bit over three-fourths of the BE at Rs 18.23 trillion for 2023-24.

In December, revenues from domestic transactions (including imports of services) were 13 per cent higher than those from these sources during the same month last year.

This means GST on import of goods (integrated GST and cess) slowed collection.

GST on import of goods rose just 3.65 per cent at Rs 42,613 crore in December year-on-year.

Barring Sikkim and Meghalaya, every state saw growth in GST collection in December. Meghalaya saw flat GST receipts at Rs 171 crore.

States and Union Territories such as Ladakh, Arunachal Pradesh, Andaman and Nicobar, and Lakshadweep saw growth in the range 35-310 per cent.

Saurabh Agarwal, tax partner at EY, attributed this to increased economic activities in these areas.

However, Rajasthan and Chhattisgarh each recorded a mere 1 per cent growth rate in December, while Jharkhand saw a 4 per cent rise.

“While major states have continued their growth, deeper analysis is required for its lack in Rajasthan, Chhattisgarh, and Jharkhand,” said M S Mani, partner, Deloitte India.