Growth in India’s gross Goods and Services Tax (GST) revenues slowed to a 27-month low of 10.2% in September, from around 10.8% in the previous two months. However, collections improved 2.3% over August revenues to touch ₹1,62,712 crore.
Revenues from domestic transactions, including services imports, were 14% higher than the tax collected from these sources during September 2022. This is the fourth time that the gross GST kitty has crossed the ₹1.60 lakh crore mark in 2023-24, the Finance Ministry said.
GST inflows from goods imports had recovered from two months of contraction to grow 3% in August, but shrank again in September, albeit by a fraction. While the Finance Ministry did not specify the extent of decline in its statement, back-of-the-envelope calculations show that GST revenues from goods imports dropped 0.11% from last September.
Slowest growth in 27 months
The last time that GST revenues grew at a slower pace was in June 2021, when collections rose a mere 2% amid the second wave of the COVID-19 pandemic. The revenues in that month were based on domestic transactions between June 5 and July 5, since taxpayers were given various relief measures in the form of waivers and reduction in interest on delayed filings for firms with an aggregate turnover up to ₹5 crore.
Last month’s GST revenues, based on transactions carried out in August, included Central GST (CGST) collections of ₹29,818 crore, State GST (SGST) of ₹37,657 crore, and Integrated GST (IGST) of ₹83,623 crore, which included ₹41,145 crore collected on the import of goods. GST compensation cess inflows were ₹11,613 crore, including ₹881 crore collected on the import of goods.
“The government has settled ₹33,736 crore to CGST and ₹27,578 crore to SGST from IGST. The total revenue of Centre and the States in the month of September, 2023 after regular settlement is ₹63,555 crore for CGST and ₹65,235 crore for the SGST,” the Finance Ministry said.
Manipur highest, Bihar sees contraction
Revenues in strife-torn Manipur, which recovered from a contraction in August, recorded the highest growth among States in September, rising 47%. GST revenues in Telangana grew 33%, followed by Jammu and Kashmir (32%), Arunachal Pradesh (27%), Tamil Nadu (21%), and Karnataka (20%).
As many as 17 States recorded revenue growth below the national average of 14%, while 12 States reported 14% or higher growth. States seeing a slower uptick included Gujarat, Uttar Pradesh, Kerala, Haryana, Odisha, and Jharkhand, with Delhi, Meghalaya, and Assam recording the weakest growth of 2%, followed by West Bengal (3%).
Bihar was the only State to report an actual contraction in GST collections in September, with revenues down 5%. The Union Territories of Lakshadweep, and Andaman and Nicobar Islands also clocked a sharp decline in revenues, which fell 45% and 30% year-on-year, respectively. By contrast, revenues shot up 81% in the Union territory of Ladakh.
Settling pending dues
A part of the rise in September’s revenues could have been spurred by businesses settling pending tax dues since the start of the GST regime in 2017-18, tax experts reckoned.
“With normal period of limitation for the financial year 2017-18 ending on September 30, some of this increased collection could be linked to businesses having settled issues with payment of taxes for the said period,” said Abhishek Jain, indirect tax head and partner at KPMG. Revenues from the indirect tax may rise further with the festive season around the corner, he added.
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