Centre, states collect gross GST receipts of ₹1.89 trillion in September

New Delhi: Central and state governments collected ₹1.89 trillion in goods and services tax (GST) before refunds in September, a robust 9.1% improvement over the year-ago period, official data showed on Wednesday.

Gross GST collections in September grew faster than the 6.5% increase in August even though a slowdown in sales was anticipated ahead of rate changes last month.

After refunds to both domestic businesses and exporters, the net GST collection stood at ₹1.6 trillion in September, a 5% annual jump. Total tax refunds in September stood at ₹28,657 crore, 40% more than the refunds issued at the same time a year ago.

September GST collections pertain to sales made in August and do not reflect the impact of GST rate changes effective 22 September, which will be visible in the collections for October.

The Central government collected ₹30,247 crore as central GST or CGST, while the states collected ₹37,553 crore as state GST or SGST. Inter-state sales yielded ₹81,706 crore in September, which will be shared between the Central and state governments.

The net GST collections of the Central and state governments so far this year increased 8.3% from a year earlier to ₹10.38 trillion.

“It is heartening to see consistent growth in GST collections, especially when some stagnancy was expected due to postponed sales in the second fortnight of August following the announcement on GST rate rationalization by the Prime Minister on 15 August,” said Abhishek Jain, indirect tax head and partner at KPMG. Another significant aspect is that this growth has continued despite the discontinuation of GST revenue from the online money gaming businesses, said Jain.

Saurabh Agarwal, tax partner at EY, said the GST revenue collection number affirmed that India’s consumption story continues to be driven by a robust and resilient domestic economy.

Strong consumer demand

“Despite lingering global uncertainties, the fact that GST rate-cut announcements have not significantly altered August consumption patterns underscores the underlying strength of consumer demand,” said Agarwal.

The GST Council scrapped the 12% and 28% GST slabs on 3 September and shifted most goods and services into lower slabs to deliver a consumption stimulus to the economy. Packaged goods, air-conditioners, television sets, dish washers and automobiles and services such as health and life insurance benefited from the tax relief.

The government expects consumption demand to get a boost of ₹2 trillion because of the tax relief. Earlier in the year, the government offered relief on income tax, seeking to boost household spending and to spur economic growth.

The government's focus on easing working capital blockage is commendable, said Agarwal, adding that the increase in tax refunds for both domestic and export sectors was a welcome measure.

Maharashtra reported a 5% annual growth in GST revenue in September, while Gujarat posted an 8% increase and Karnataka a 7% jump. Tamil Nadu reported a rise of 4% in revenue in the month, while Uttar Pradesh reported 11% growth.