In a historic milestone, India’s Goods and Services Tax (GST) revenues surpassed ₹2 lakh crore for the first time in April. Typically, April sees the highest GST collections, driven by the fiscal year-end activities in March, when taxpayers finalize their books, hasten to meet tax deadlines, and rectify discrepancies as required by the revenue authorities. April’s GST collection reached slightly over ₹2.1 lakh crore, marking a 12.4% increase from April 2023’s ₹1.87 lakh crore, which was previously the highest monthly collection. While this impressive figure might not yet represent the new monthly norm, given the absence of year-end pressures, it suggests a robust trajectory for GST revenues. If the economic momentum continues and GST revenue growth sustains in the 11%-12% range seen last year, April 2023’s high of ₹1.87 lakh crore could emerge as this year’s average monthly benchmark. For context, last year’s average monthly revenues were ₹1.68 lakh crore, with the previous peak being April 2022’s ₹1.67 lakh crore.
Finance Minister Nirmala Sitharaman hailed April’s GST revenue milestone as a “landmark,” crediting it to a resilient economy and enhanced collection efficiency. This achievement alleviates earlier concerns about the GST regime’s underperformance since its inception 82 months ago. Enhanced enforcement against fraud, such as fake invoicing, and stringent compliance measures have undoubtedly bolstered revenues. With central GST revenues surpassing last year’s targets, achieving the interim Budget goals for 2024-25 now demands less than 10% growth. The incoming government will face the relatively straightforward task of adjusting revenue targets in the full Budget. However, the pressing challenge lies in broadening the GST base and streamlining its complex rate structure to simplify the tax for consumers and investors, particularly now that revenue anxieties have diminished. Notably, the BJP’s election manifesto highlights the simplification of the GST portal for small businesses, while the Congress pledges a unified, moderate tax rate with minimal exceptions, no levies on agricultural inputs, and equitable revenue sharing with local bodies. Intelligent GST reforms, shaped by comprehensive stakeholder consultations, must be a priority for the new administration to rectify consumption barriers and pave the way for the next cycle of investment and growth.
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