With the latest print, GST revenue collections have averaged at Rs 1.66 lakh crore per month during April-October 2023, up 11.4 per from the monthly average of Rs 1.49 lakh crore seen during April-October 2022.

Overall, the total GST collections stood at Rs 1,72,003 crore in October, recording the highest year-on-year growth rate in 10 months. Out of the total GST revenue in October, Central GST — the tax levied on intra-state supplies of goods and services by the Centre — was Rs 30,062 crore, State GST — the tax levied on intra-state supplies of goods and services by the states — was Rs 38,171 crore, Integrated GST (IGST) — the tax levied on all inter-state supplies of goods and services — was Rs 91,315 crore (including Rs 42,127 crore collected on import of goods) and cess was Rs 12,456 crore (including Rs 1,294 crore collected on import of goods).

Revenues from domestic transactions (including import of services) were 13 per cent higher the figure from the same month last year, the Finance Ministry said in its statement. In October, the government settled Rs 42,873 crore to Central GST and Rs 36,614 crore to State GST from Integrated GST. As a result, the total revenue for the month after settlement was Rs 72,934 crore for the Centre and Rs 74,785 crore for State GST.

What is the state-wise growth in GST revenue?

GST revenues increased across the country in October, with at least 25 states/union territories recording a growth rate higher than 10 per cent. Maharashtra, Karnataka, Uttar Pradesh and Tamil Nadu — the states with the highest SGST share — recorded a growth of 14 per cent, 12 per cent, 10 per cent and 9 per cent, respectively. However, strife-torn Manipur posted a 19 per cent decline, while Himachal Pradesh, hit by floods and landslides, recorded a 2 per cent contraction.

After settlement, the SGST revenue, which accounts for SGST revenue and the share of SGST from the IGST, totalled Rs 4.97 lakh crore during April-October, an increase of 12 per cent from the period last year. The Finance Ministry, however, did not provide the state-wise breakup of monthly GST revenue this time for October as has been the norm from last few years.

What are the reasons for the surge in GST revenue?

With the recent notices being sent by the GST authorities for recovery of non-payment of tax, or underpayment, or of wrongful availment of input tax credit, some businesses would have made payments to settle the disputes, experts said. The government could possibly explore rate rationalisation as the next measure under GST, one expert said.

Abhishek Jain, Indirect Tax Head & Partner, KPMG said, “This significantly increased collection could be linked to settlement of disputes for FY 17-18 as the normal period of limitation was ending on September 30. A mid-year collection of such an increased number is definitely worth a cheer and the ongoing festivities driven consumption could help this continue.”

“The growing emphasis on audits led by specific information available on various databases, not only on the GST portal, has led to a significant increase in compliance across sectors and states. This is also reflected in the upsurge in the GST collections across key manufacturing and consuming states,” MS Mani, Partner, Deloitte India said.

Going ahead, with consumption expected to pick up further during festival season, GST revenues are expected to improve. “The collections in next month are likely to go up due to the festive season. Data analytics, artificial intelligence, stricter norms combined with GST authorities in action across India is working well towards the increased collection. With the stable collection, the government can now consider rate rationalisation as the next task,” Saurabh Agarwal, Tax Partner, EY said.

What does the pickup suggest for government finances?

Central GST collections, after settlement of share from IGST, stood at Rs 4.87 lakh crore during April-October. This accounts for 60 per cent of the Budget target for CGST of Rs 8.12 lakh crore. A pickup in GST revenues would also imply a significant support for the government’s fiscal arithmetic, as it is likely to see a shortfall in the disinvestment receipts and as direct tax revenue growth remains a step behind. Experts said at the present growth rate of GST revenue, CGST collections are expected to slightly overshoot the budgetary target for FY24.

“GST collections recorded a meaningful sequential uptick…benefitting from quarter end adjustments related to transactions in the previous month as well as the overall momentum in the economy. With this, the pace of YoY growth jumped to a 10-month high in October 2023, which is encouraging. At present, we project the CGST collections to mildly exceed the FY2024 BE,” Aditi Nayar, Chief Economist, Head, Research & Outreach, ICRA Ltd, said.