Revenues from the Goods and Services Tax (GST) crossed the ₹2 lakh crore mark for the first time in April. The month of April has usually delivered the highest GST kitty as it involves taxes paid for activity undertaken in March, when taxpayers close their books for the year, scurry to meet tax filing deadlines, and make adjustments to square off dues sought by the revenue department owing to oversights or interpretation differences. With slightly over ₹2.1 lakh crore of gross revenues, last month’s GST collection was 12.4% higher than the April 2023 tally of ₹1.87 lakh crore, which marked the highest monthly intake prior to the latest data set. Minus the year-end effect, revenues in subsequent months will moderate so the ₹2 lakh crore figure may not be the new normal for monthly GST collections just yet. However, assuming the present momentum of the economy continues and GST revenue growth persists in last year’s 11%-12% range, last April’s high of ₹1.87 lakh crore could well be this year’s monthly average. Bear in mind that the average monthly revenues last year were ₹1.68 lakh crore, and before the year began, the highest monthly collection was seen in April 2022, at ₹1,67,540 crore.
Finance Minister Nirmala Sitharaman has termed last month’s ₹2 lakh crore-plus GST revenues a “landmark”, attributing them to a strong economy and efficient collections. This should put to rest the Centre’s concerns from a few years ago that returns from the GST regime, now 82 months old, had been underwhelming. No doubt, sustained action against frauds, such as fake invoicing, and stricter compliance norms have helped shore up revenues. With central GST revenues overshooting last year’s targets, meeting the goals set in the interim Budget for 2024-25 now requires less than 10% revenue growth. For the next government, the easy part would be to upgrade revenue targets in the full Budget. The more critical imperative is to plan and execute the expansion of the GST net, and expedite the long-awaited reboot of its complex rate structure to make it a truly simple tax for consumers and investors, now that revenue worries are relatively muted. Incidentally, the BJP’s election manifesto, which takes credit for ringing in GST, only promises to make its portal simpler for small businesses to use. The Congress has assured a switch to a single, moderate tax rate with few exceptions, no levies on farm inputs, and sharing of revenues with panchayats and municipalities. Smart GST reforms, informed by stakeholder consultations, need to be at the forefront of the agenda of whoever comes into office, to correct anomalies that hold consumption back and set the foundations for the next virtuous cycle of investment and growth.
