India’s second highest ever GST collection, recorded in March at Rs 1.6 lakh crore, is courtesy the ongoing inflation, government initiatives on technology front, and growth of the economic activity, among other factors. “Various government initiatives on the technology front to improve GST compliances appear to show the actual effect in the form of GST collection rising each month. While the various parts of the world are hit by recession, India manages to seek growth indicating overall tax collection,” said Saurabh Agarwal, Tax Partner, EY. 

Higher GDP for higher GST collection

Gross GST revenue collection in March 2023 grew 13% on-year to Rs 1,60,122 crore, of which Central GST was Rs 29,546 crore, State GST Rs 37,314 crore, Integrated GST Rs 82,907 crore (including Rs 42,503 crore collected on import of goods) and cess Rs 10,355 crore, the finance ministry said in a statement. “The GST collection has grown 12.7 per cent YoY, 7.0 per cent MoM. Part of this growth can be attributed to the inflation effect,” said Deepak Jasani, Head of Retail Research, HDFC Securities. He added that while typically, the second half of the fiscal year generates higher GDP and consequently higher GST collection, “it will be interesting to see as to whether we will see a repeat of this in the coming April numbers.” Interestingly, last month also witnessed the highest IGST collection ever, according to the ministry.

Growth in compliance 

Meanwhile, Tanushree Roy, Director- Indirect Tax, Nangia Andersen India, said that the jump in the GST collection indicated the growth in compliance by businesses. “At the same time, the commendable efforts put by the revenue authorities to ensure compliance also seem to have borne fruit and indeed need to be lauded. Collections also received a fillip given that March 2023 marked the end of the financial year,” she added.

Also Read

India March factory activity hits 3-month high, but job cuts resume

MS Mani, Partner, Deloitte India, agreed, “The average collections of Rs 1.5 trillion reflect the maturity of the GST compliance process where all businesses are aware of the various processes by which data matching is done to ascertain non compliance.” The collections data also puts any apprehensions on the stability of the GST collections ar rest since it has been “uniformly high with an average of Rs 1.5 trillion during the year”. The yoy increase of 13 per cent represents the consumption stability in the economy together with the compliance and anti- evasion focus adopted by the GST authorities, MS Mani added.

Further, this is the fourth time in the financial year that the gross GST collection has crossed Rs 1.5 lakh crore-mark and with the growth in economic activity and increased focus on GST analytics based audits, the trend should see upward trajectory in the coming months as well, said Mahesh Jaising, Partner, Leader – Indirect Tax, Deloitte India.

Will FTP 2023 have a role?

With the new Foreign Trade Policy (FTP) being rolled out, it would also be interesting to look at its impact on the import-export which is expected to have a role in GST collections too, said Mahesh Jaising. The government on Friday came out with FTP 2023 which seeks to boost the country’s exports to USD 2 trillion by 2030 by shifting from incentives to remission and entitlement based regime.