May’s revenues, for transactions undertaken in April, the first month of the new financial year, were the lowest in three months, and 16% below the record ₹1.87 lakh crore collected in April. File
| Photo Credit: Reuters
India’s gross Goods & Services Tax (GST) collections grew 11.5% in May — the slowest uptick in six months — to cross ₹1.57 lakh crore, with revenues from domestic transactions rising 11% and imports yielding 12% more taxes than a year ago.
Sequentially, May’s revenues, for transactions undertaken in April, the first month of the new financial year, were the lowest in three months, and 16% below the record ₹1.87 lakh crore collected in April. This was the 14th successive month that GST revenues were over ₹1.4 lakh crore and the fifth occasion that they surpassed the ₹1.5 lakh crore mark.
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ICRA chief economist Aditi Nayar said that GST revenue growth is likely to hover in the range of 10% to 11% in the coming months, with revenues between ₹1.55 to ₹1.65 lakh crore per month.
Revenue from imports recover
An ongoing drive against indirect tax evasion, as well as higher consumption spending through the withdrawn ₹2,000 currency notes which will remain legal tender till at least September 30, could still bump up collections.
The 12% growth in revenues from goods imports marks a turnaround from a three-month streak of slowing growth capped by a 4.5% contraction in April, and could indicate a recovery in discretionary domestic demand.
Revenues from goods imports were up 29% between April 2022 and January 2023, while taxes from domestic transactions and services imports were up 22%. However, February and March had only recorded a 6% and 8% uptick in taxes on goods imports.
GST compensation cess collections, which had also hit a record high of ₹12,025 crore in April, remained robust at ₹11,489 crore in May, and included a little over ₹1,000 crore from goods imports.
State-wise 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,” said M.S. Mani, partner at Deloitte India.
Overall domestic revenues grew 11% in May and 16 States recorded higher revenue growth, led by Mizoram (52%), Arunachal Pradesh (47%), Delhi (25%) and Meghalaya and Madhya Pradesh, whose revenues rose 23%. Revenues grew 11% in Odisha, Kerala, and Andhra Pradesh, 12% in Karnataka and 13% in Tamil Nadu and Telangana.
Revenues contracted sharply in strife-torn Manipur, dropping 17% year-on-year, while Chhattisgarh also reported a 4% decline in revenues. Eight States recorded slower revenue growth than the national average, including Rajasthan (up 4%) and Gujarat, Punjab, West Bengal and Jharkhand, each of whom saw a 5% rise in GST inflows in May.
“The total revenue of Centre and the States in the month of May 2023 after regular settlement is ₹63,780 crore for Central GST (CGST) and ₹65,597 crore for the State GST (SGST),” the Finance Ministry said in a statement.
₹2,000 note withdrawal impact
The government has settled ₹35,369 crore towards CGST and ₹29,769 crore to SGST from the Integrated GST (IGST) collections of the month, which amounted to ₹81,363 crore. A little over 51% of the month’s IGST collections came from taxes on imports of goods.
“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,” said Parag Mehta, partner, indirect tax at N.A. Shah Associates. The discontinuance of the ₹2000 note has also spurred purchases of high-end and luxury items that could reflect in GST revenues, he added.
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