Farewell to FY24, with sterling GST collections

In FY24, Centre and states reported gross GST collection of Rs. 20.14 trillion, an 11.7% increase compared to collections in FY23, higher than the 9.1% nominal GDP growth projected for the current year.
In FY24, Centre and states reported gross GST collection of Rs. 20.14 trillion, an 11.7% increase compared to collections in FY23, higher than the 9.1% nominal GDP growth projected for the current year.

Summary

  • The outgoing financial year saw the highest goods and services tax collections on record, while March had the second highest collections since the indirect tax regime debuted in July 2017

India wrapped up financial year 2023-24 with the highest goods and services tax (GST) collections on record, reflecting robust economic growth and administrative efficiency. The last month of the fiscal also saw the second highest GST collections since the indirect tax regime debuted in July 2017.

In FY24, the Centre and state governments clocked gross GST collections of 20.18 trillion, an 11.7% increase from the previous year, the Union finance ministry said on Monday, terming the performance “strong" and “consistent." In March, the collections came in at 1.78 trillion, up 11.5% from a year earlier.

The increase in GST collections in FY24 at 11.7% is higher than the 9.1% nominal gross domestic product (GDP) growth projected for FY24 by the statistics ministry, reflecting the buoyancy in GST collections. The statistics ministry had said in its second advance estimate of GDP that net tax collection on products may grow 15.5% in FY24, faster than 10.6% in the year before.

Prospects for high GST collections remain promising in the forthcoming quarter, too, particularly in light of the upcoming general election, said Saurabh Agarwal, a tax partner at EY India.

“India’s economic growth performance will keep supporting GST revenue collection growth in the coming quarters. There is also the potential for further widening of the tax base over the next two to three years on account of the administrative steps being taken. At present, there are about 14 million registered taxpayers," Agarwal added.

Monday’s data showed the Centre collected about 8.63 trillion in central GST in FY24 after settlement for inter-state sales, crossing the revised estimate of 8.12 trillion as per the Union Budget presented in February.

After adjusting for refunds, GST revenue for March 2024 stood at 1.65 trillion, up 18.4% year-on-year. The finance ministry said the surge in GST receipts during the month was driven by a significant rise in revenue collection from domestic transactions at 17.6%, signalling robust domestic market conditions.

In March, the Centre collected 77,796 crore, while the states collected 81,450 crore, after settlement of taxes on inter-state trade. During the month, collections from the GST cess levied on automobiles, tobacco and aerated drinks stood at 12,259 crore, including 996 crore collected on imported goods. In February, automobile sales had grown 13% year-on-year, the Federation of Automobile Dealers Associations had said last month. Taxes for sales in February are collected in March.

For FY24, the average monthly GST collection stood at 1.68 trillion, surpassing FY23’s average of 1.5 trillion. After adjusting for refunds, GST revenue for FY24 is 18.01 trillion, a growth of 13.4% year-on-year.

Experts also expressed hope that robust revenue collection growth may ease the pressure of tax enforcement action on businesses.

“As the tax base expands and taxpayers demonstrate greater compliance, there is a potential for a reduction in scrutiny and routine notices. This would be beneficial for businesses, as it would reduce the administrative burden and provide a conducive environment for ease of doing business," said Ankur Gupta, practice leader, indirect tax, at tax and audit firm SW India. It’s essential for tax administration to strike a balance between enforcement and facilitating compliance, ensuring that businesses can thrive while maintaining regulatory integrity, he added.

According to official forecasts, India’s economy is estimated to grow at 7.6% this fiscal year, but government economists believe it could be better than this.

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