Higher GST booty reflects increase in economic activities and a healthy growth rate

Reflecting the vibrancy of the Indian economy, the gross Goods and Services Tax (GST) revenue collected in June, 2023 was Rs 1,61,497 crore, which is 12 per cent higher than last year. The GST regime was rolled out by the Indian government six years back.

Of the total Rs 1.61 lakh crore, CGST was Rs 31,013 crore, SGST Rs 38,292 crore, IGST Rs 80,292 crore (including Rs 39,035 crore collected on import of goods) and Acess of Rs 11,900 crore (including Rs 1,028 crore collected on import of goods).

“On many common-use items, tax under GST has been lower compared to pre-GST tax rates: Items such as tea, milk powder, sugar, edible vegetable oils, spices and footwear (priced up to Rs 500) attract taxes of 5 per cent under GST, compared with earlier tax incidence of 6-10 per cent,” Union Finance Minister Nirmala Sitharaman tweeted.

This high collection of GST indicates that the consumption levels are going up in the country and economic activities are rising.

High GST collection certainly means higher revenue into the government’s coffers.

According to a Deloitte Insights paper by Dr Rumki Majumdar, “While betting on consumption-driven growth is obvious given India’s large, young, and rising share of the upper middle-income population (with a high propensity to spend), we believe that investment will play an important role over the next two years. It is investments that will provide India with necessary momentum to take off on a path of sustained domestic demand-led growth for decades to come.

“Our overall outlook for the Indian economy remains positive: We expect investments to see a turnaround and thrust the economy into sustainable growth. India will likely grow at a moderate pace of 6-6.5 per cent in FY 2023-24, as the global economy continues to struggle. Growth in the next year will likely pick up as investments kick-start the virtuous circle of job creation, income, productivity, demand, and exports supported by favourable demographics in the medium term,” the paper said.

The reports add that two observations were worth taking note of: Despite the global slowdown, exports performed well, probably because of the depreciated currency against the dollar. While goods exports remained modest, India’s services exports skyrocketed by 30 per cent between April and February.

A strong digitisation drive the world over, cost-cutting measures by businesses to deal with the impending slowdown, and the growing trend of remote working increased the demand for exports of services in technology, where India has a comparative advantage. Interestingly, the share of business and professional services in total services exports also increased as companies globally now prefer outsourcing a wide range of professions, such as accounting, audit, R&D, quality assurance, and after-sales service. The government has settled Rs 36,224 crore to CGST and Rs 30,269 crore to SGST from IGST. Last month’s total revenue of the Centre and states after regular settlement has been Rs 67,237 crore for CGST and Rs 68,561 crore for the SGST.

The June revenues are 12 per cent higher than the GST revenues in the same month last year. During the month, revenues from domestic transactions (including import of services) stood 18 per cent higher than the revenues from these sources during the same month last year.

It is for the fourth time that the gross GST collection has crossed Rs 1.60 lakh crore mark. The average monthly gross GST collection for the first quarter of the FY 2021-22, FY 22-23 & FY 23-24 is at Rs 1.10 lakh crore, Rs 1.51 lakh crore and Rs 1.69 lakh crore, respectively.