In the month of May, the GST collections of India surged by 11.5%, standing slowest in 6 months to cross Rs 1.57 lakh cr with the revenue from the domestic transactions rising 11% and imports which generate 12% additional taxes compared to before year.
May’s revenue for the transaction that takes place in the month of April, the initial month of the new fiscal year was the lowest in the three months, and 16% below the record Rs 1.87 lakh crore GST collected in April 2023. The same was the 14th successive month in which the GST revenues were more than Rs 1.4 lakh cr and the 5th occasion which exceeds the number by Rs 1.5 lakh cr.
Aditi Nayar, the chief economist at ICRA, predicted that GST revenue growth will be in the 10% to 11% range in the following months, with monthly revenues ranging from Rs 1.55 to Rs 1.65 lakh crore.
Imports Recover Revenue
The current drive against the evasion of the indirect tax and the higher consumption spending via withdrawal of Rs 2000 currency notes that shall be legal tender till at least 30th September can increase the collections.
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Via the import of goods, a 12% rise in revenues would be a reversal from the three-month streak of sluggish growth which is limited to a 4.5% contraction in the month of April and can show the recovery of discretionary domestic demand.
A 29% rise is there in the revenues incurred via the import of goods between April 2022 and January 2023 and there is a 22% rise in the taxes collected via domestic transactions and services imports. February and March have recorded a 6% and 8% increase in the taxes on imported goods.
GST compensation cess collections, which also reached a record high of Rs 12,025 cr in April, were strong in May at Rs 11,489 cr and comprised just over Rs 1,000 cr from imported products.
State-wise GST Collections
“While the collections in absolute terms are lower than the previous month — which had an embedded year-end [compliance-led] impact, it reflects a continuation of the inherently good economic performance across States witnessed since last year,” the tax expert stated.
The total domestic GST revenue increased by 11% in May, with 16 States recording higher revenue growth, including Meghalaya and Madhya Pradesh, which saw revenues increase by 23%, Mizoram (52%), Arunachal Pradesh (47%), and Delhi (25%) in that order. Revenues increased 11% in Odisha, Kerala, and Andhra Pradesh, 12% in Karnataka, and 13% in Tamil Nadu, and Telangana.
Revenues fell drastically in strife-torn Manipur, falling 17% year on year, while income fell 4% in Chhattisgarh. Eight states witnessed slower revenue growth than the national average, including Rajasthan (up 4%), Gujarat, Punjab, West Bengal, and Jharkhand, which all saw a 5% increase in GST inflows in May.
The finance ministry stated “The total revenue of Centre and the States in the month of May 2023 after the regular settlement is ₹63,780 crore for Central GST (CGST) and ₹65,597 crore for the State GST (SGST),”
Impact on Withdrawal of Rs 2,000 Note
A settlement of Rs 35,369 cr for the CGST and Rs 29,769 cr to SGST via IGST collections of the month that totalled Rs 81,363 cr would have been performed by the Government. Through the taxes with the import of goods, 51% of the month’s IGST collection would have emerged.
“The GST collections are bound to increase further due to the special two-month drive for detection of fake registrations and strict action against unscrupulous elements for misuse of Input Tax Credit,” the tax expert stated.
