The goal of reaching Rs 2 lakh crore in monthly GST collections by FY 2025-26 is ambitious yet attainable, according to tax expert Rajat Mohan, Executive Director at MOORE Singhi. This target, while seemingly high for FY 2024-25, could be realistic with strategic enhancements in the GST framework.
Record-Breaking GST Collections
India achieved its highest-ever GST collection of Rs 2.10 lakh crore in April 2024. However, Mohan notes that April usually sees the highest revenue due to year-end financial activities, and this should not be expected as the norm for subsequent months.
Forecast for Consistent Growth
Mohan predicts a steady rise in GST collections, foreseeing nearly Rs 1.9 lakh crore per month for the upcoming fiscal year with a nominal annual revenue growth rate of 14%, as per the GST (Compensation to States) Act of 2017. By implementing key strategies, a consistent monthly collection of Rs 2 lakh crore is achievable by FY 2025-26.
1. Enhancing Compliance
Compliance rates have significantly improved since GST’s inception in July 2017, with recent data showing over 90% compliance as of January 2024. While essential, enhancing compliance alone won’t suffice for reaching the Rs 2 lakh crore target. Continuous efforts in this area will, however, provide a strong foundation.
2. Establishing a GST Appellate Tribunal
The creation of a dedicated GST Appellate Tribunal (GSTAT) is crucial. GST-related litigations have surged due to frequent legislative changes and ambiguities, overburdening the judiciary. A GSTAT will streamline dispute resolution, facilitate efficient assessments, and expedite revenue recovery.
3. Digitalising Tax Assessments
Modernising tax administration through technological advancements, such as chatbots for initiating show cause notices and managing hearings, will speed up dispute resolutions and encourage accurate tax payments. This digitalisation is expected to significantly boost GST collections.
4. Standardising GST Audits
Implementing uniform GST audit procedures across states will enhance compliance, reduce complexities, and minimise tax evasion. Standardised audits are anticipated to greatly increase overall GST revenue.
Fiscal Milestones and Future Projections
The fiscal year 2023-24 saw total gross GST collections surpass Rs 20 lakh crore, an 11.7% increase over the previous year. This led to an average monthly collection of approximately Rs 1.68 lakh crore, reflecting a steady 11.5% year-on-year growth.
Path Forward
By focusing on these strategic initiatives—enhancing compliance, establishing a GST appellate tribunal, digitalising tax assessments, and standardising audits—India is well-positioned to meet and potentially exceed its GST revenue targets. These measures will not only ensure robust financial health but also contribute to economic stability.
With strategic adjustments and continued focus on key growth areas, achieving a monthly GST collection target of Rs 2 lakh crore is within reach, ushering in a new era of fiscal strength for India,” asserts Mohan.