The Finance Ministry reported that GST collections in May 2024 stood at ₹1.73 lakh crore. Although this figure is lower than April’s ₹2.10 lakh crore, it surpasses the ₹1.57 lakh crore collected in May of the previous year. This suggests stable economic growth and a robust GST framework.
Key Insights into GST Collection
The May collection reflects the consumption of goods and services in April. Experts believe that the average GST collection of ₹1.7 lakh crore is becoming the “new normal,” compared to ₹1.6 lakh crore in FY24.
The gross GST collections for FY25 until May reached ₹3.83 lakh crore, marking an 11.3% year-on-year growth. This growth is driven by a significant 14.2% increase in domestic transactions and a modest 1.4% rise in imports. After accounting for refunds, the net GST revenue stands at ₹3.36 lakh crore, showing an 11.6% increase compared to the same period last year.
Expert Opinions
According to MS Mani, Partner at Deloitte, the steady GST collections align with recent GDP estimates, indicating a resilient economy. Despite challenges like the election season and heatwave, the GST system has shown maturity and stability.
Saurabh Agarwal, Partner at EY, noted increased GST collections from developing regions such as Jammu & Kashmir, Manipur, Puducherry, and Arunachal Pradesh, suggesting growing consumption and broader economic progress. He also pointed out that higher collections in northern states like Delhi and Uttar Pradesh could be linked to election spending and increased purchases of cooling appliances due to high temperatures.
Vivek Jalan, Partner at Tax Connect Advisory Services, highlighted that the first two months of FY25 were election months. Despite this, domestic collections saw a 14% increase, attributed to the time-barring period for issuing notices for FY 2019-20 and partial admissions of issues by taxpayers. Recovery actions taken by GST departments also contributed to high collections.
Future Outlook
Looking ahead, MS Mani expressed confidence in moving forward with the next stage of GST reforms, anticipating minimal revenue impact from these changes. However, Saurabh Agarwal cautioned that a combination of the summer heatwave and lower auto sales might result in flat or lower GST collections in June 2024 compared to April’s peak. He also noted that the establishment of GST Tribunals later this year might affect collections in the fourth quarter and beyond.
Conclusion
The GST collection figures for May 2024 indicate a stable and resilient economy, with consistent growth in domestic transactions. While there are potential challenges ahead, the overall outlook remains positive, supported by robust compliance and effective recovery actions. As the GST system continues to mature, businesses can expect a more streamlined and predictable tax environment.
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