In April, India’s GST collection hit a record high of ₹2.1 lakh crore, showing a strong economy start for the new fiscal year. Finance Minister Nirmala Sitharaman praised the efficient tax collection and the economy’s momentum for this achievement.
Compared to last year, GST collection rose by 12.4%, mainly due to a 13% increase in domestic transactions, indicating healthy local demand. The economy is estimated to have grown by 7.6% in FY24, and the IMF predicts a 6.8% expansion in FY25, maintaining India’s position as the fastest-growing major economy globally.
The high growth in GST collection sets the stage for reforms in the GST regime, possibly including changes in tax slabs, despite potential revenue loss. B K Goyal & Co LLP Chartered Accountants suggest that this strong performance could lead to bolder decisions such as rationalizing tax rates or bringing more products under the GST.
The current GST system is seen as overly complex with various rates and exemptions, leading to disputes and compliance issues. Sitharaman highlighted the need for rate rationalization and cleaning up certain areas of the system, such as input tax credit issues.
After refunds, the net GST collection stood at ₹1.92 lakh crore, a 15.5% increase from the previous year. This growth was observed across all states and components of the tax, indicating widespread improvement. Increased compliance, along with efforts to combat tax evasion and fake invoicing, has contributed to higher revenue. India is also witnessing growing number of GST Registration in Delhi.
Financial year-end adjustments and deadlines for GST audits also played a role in the surge in collection. The collected GST included central GST (CGST), state GST (SGST), integrated GST (IGST), and cess, with significant amounts settled between the central and state governments. Overall, this translates to substantial revenue for both the central and state governments for April.