The tax on goods and services (GST) in March 2022 affected ₹1.42 lakh crore, the highest ever since the start of the new indirect tax system in 2017, which highlights the ongoing robust economic recovery, technology-based compliance and rationalization of reverse tax structure.
This is the ninth month in a row that GST revenues have passed ₹1 lakh crore mark; the disc collection of ₹1 42 095 crore in March is 15% higher than ₹1,23,902 crore was reached the same month a year ago, according to government data. The previous record collection was ₹SEK 1,40,986 million in January.
According to government data, the total GST collections in the current financial year ending March 31 were slightly above ₹14.8 lakh crore, 17.5% higher than ₹12.2 lakh crore was collected in 2019-20, a year without Covid. GST collections dipped below ₹1 lakh crore in just two months 2021–22 – May 2021 ( ₹97,821 crore) and June 2021 ( ₹92 800 crore) – mainly due to the second wave of pandemic.
“The average monthly gross GST collection for the last quarter of the financial year 2021-22 has been ₹1.38 lakh crore against the average monthly collection of ₹1.10 lakh crore, ₹1.15 lakh crore and ₹1.30 lakh crore during the first, second and third quarters, the union finance ministry says in a statement.
The figures reflect the ongoing economic recovery. The Indian economy is expected to grow by 8.9% in 2021-2022 according to the government’s other estimates, which will help the economy expand to above its pre-pandemic level. With approximately 97% of the population over the age of 14 receiving at least one dose of the vaccine (over 80% have been fully vaccinated), and with all Covid-related restrictions removed (the pandemic is not a single case classified as a disaster under Indian law), life and work looks set to return to normal in the new fiscal year, although rising commodity prices (especially for oil) could still ruin India’s budget balance.
“Together with economic recovery, anti-flight activities, in particular measures against counterfeit invoices, have contributed to the improved VAT. The revenue improvement has also been due to various tax rationalization measures implemented by [GST] Council to correct the inverted service structure “, the Ministry stated. A reverse customs structure is a situation where input goods are taxed at a higher tax rate than finished goods.
Experts said that although the Mars collections were robust, they were uneven. Devendra Kumar Pant, chief economist at India Ratings & Research, raised concerns about variations in collections between states. “While collections grew by over 15% for Punjab, Haryana, Odisha, Maharashtra and Andhra Pradesh in March 2022 for states such as West Bengal. Jharkhand, Chhattisgarh, Madhya Pradesh, Tamil Nadu, Telangana, Rajasthan and Uttar Pradesh, growth was less than 10% “This indicates variations between states in consumption and investment growth and provides more support for states’ demand for continued GST compensation after five years,” he said.
“While there are government variations in the growth of GST collections, it would be interesting to see an analysis linking government GDP [gross domestic products] growth with the GST collections during the same period, says MS Mani, partner at Deloitte India.