At 6.1% of GDP, GST revenue for FY24 still not above pre-GST level after 7 years, says former CEA Arvind Subramanian

After India's goods and services tax (GST) collections touched record high-mark at ₹2.10 lakh crore in April 2024, Arvind Subramanian, former Chief Economic Adviser (CEA) to the central government has now highlighted that the despite the high collections, GST revenue for fiscal 2023-24 (FY24) has still not surpassed the pre-GST level.

Also Read: The caveat you need to know while reading the GST ‘record’ in April

Taking to social media platform ‘X’, the former CEA who is a senior fellow at Peterson Institute for International Economics, said that at 6.1 per cent gross domestic product (GDP), India's GST revenue--even after seven years, is still not above the pre-GST level, despite recovery from the COVID-19 pandemic and better implementation. He added that though the April numbers were robust, but the focus must be on revenues, net of refunds, not on headline collections.

The former CEA also said that until February 2024, the government did not publish the refunds number which gave the impression that collections were revenues. ‘’Kudos to @FinMinIndia for changing that and acting to enhance transparency. Monthly releases now provide both numbers,'' said Subramanian.

According to government data, April's record-high number also represented the first time when GST collection has crossed the ₹2 lakh crore-mark, since the unified indirect tax regime was rolled out seven years ago.

“This represents a significant 12.4 per cent year-on-year growth, driven by a strong increase in domestic transactions, up 13.4 per cent, and imports, up 8.3 per cent," said a finance ministry statement. After accounting for refunds, the net GST revenue for April stood at ₹1.92 lakh crore, 15.5 per cent higher than the same period last year.

Among the states, Maharashtra led with the highest collections, of ₹37,671 crore, recording 13 per cent growth, while Karnataka was second with ₹15,978 crore collected in the month, showing nine per cent growth. Gujarat was third, with collections of ₹13,301 crore. Uttar Pradesh with ₹12,290 crore collections, up 19 per cent, was higher than Tamil Nadu’s collections at ₹12,210 crore.

‘’The all-time high GST collection in April 24 has come on the back of strong growth in GST collections from Northern States like UP, Punjab, Haryana, Delhi etc. The GST collection in April month has traditionally been higher (the previous highest GST collection was also achieved in April, 23), given that it reflects the economic activity in the month of March, which is the last month of the fiscal year,'' said Gunjan Prabhakaran, Partner & Leader, Indirect Tax, BDO India.