GST collection in October up 24% at Rs 1.3 trillion, second highest ever

Finance ministry expects positive trend to continue and H2 to post higher revenues; says constant rise in collection in the past five months indicates faster economy recovery

In step with the constant rise in the past five months, goods and services tax (GST) collected in October rose to Rs 1.3 trillion, which is 24 per cent higher than in the same period a year ago and 36 per cent more than the collection in the equivalent month of 2019-20, which was before the pandemic.

This is the second highest collection since the introduction of the new indirect regime in 2017, reflecting strong economic recovery in the second half of the fiscal year.

The highest collection ever was more than Rs 1.40 trillion in April this year.

The finance ministry expects the positive trend to continue and the second half of the year will post higher revenues.

“This is very much in line with the trend in economic recovery. This is also evident from the trend in the e-way bills generated every month since the second wave. The revenues would have still been higher if the sales of cars and other products had not been affected on account of disruption in supply of semiconductors,” the ministry said on Monday.

Further, the ministry said the efforts of the state and Central tax administration helped collection, resulting in increased compliance over previous months.

In addition to action against individual tax evaders, this has been a result of the multi-pronged approach followed by the GST Council.

Abhishek Jain, tax partner, EY, said: “The robust GST collection is encouraging and a sign of economic recovery. With the ongoing festive season, we can expect similar or even higher GST collection.”

Some measures taken by Council to ease compliance include no filing through SMS, enabling Quarterly Return Monthly Payment (QRMP) system and auto-population of return.

During the past one year, GSTN has augmented the system capacity considerably.

To discourage non-compliance, measures such as blocking e-way bills for not filing returns, system-based suspension of registration of taxpayers who have failed to file six returns in a row, and blocking credit for return defaulters have been taken, the ministry highlighted.

M S Mani, senior director, Deloitte India, said: “The impressive GST collection has resulted from a combination of sustained economic growth and continuing policy initiatives to improve compliance and discourage evasion.”

“If the robust GST collection in this fiscal year continues, the target for the year is likely to be exceeded. This would provide some fiscal space to absorb the increased health care costs, etc,” he said.

“We may see more checks and balances to encourage filers and dissuade non-filers,” Mani pointed out.

In the gross GST collected in October, central GST was Rs 23,861 crore, state GST Rs 30,421 crore, integrated GST Rs 67,361 crore (including Rs 32,998 crore collected on import of goods) and cess Rs 8,484 crore (including Rs 699 crore collected on imports of goods).