NEW DELHI: In a significant development, Goods and Services Tax (GST) collections surged by 15.4%, reaching Rs 2,11,205 crore in July. This marks the second-highest collection figure since the implementation of the new GST framework last September. A notable contributor to this uptick was a staggering 29% increase in the Integrated GST (IGST) levied on imports.
The notable rise in IGST on imports during July, reflecting transactions from the previous month, can largely be attributed to escalating crude oil prices and other commodities influenced by the ongoing West Asia conflict. Additionally, robust economic activity observed in June, characterized by the fastest factory output growth in nearly two years, played a pivotal role in enhancing tax revenues, which are viewed as early indicators of economic performance. Price increases in the fast-moving consumer goods (FMCG) and automobile sectors also contributed positively to the collections.
Breakdown of GST Collections
The Central GST collections were reported to have increased by 12.3%, nearing Rs 40,000 crore, while the State GST witnessed an increase of 8.7%, approaching Rs 48,000 crore.
“The high GST collections tie in very well with the 7.3% increase in industrial production during June. It reflects continued economic resilience despite the challenges in the external environment… The steady growth in GST collections each month indicates that overall domestic consumption is becoming largely insulated from seasonal variations and external headwinds,” said MS Mani, a partner at Deloitte India.
Concerns Regarding Import Dependency
Despite the optimistic outlook, some experts have expressed concern over the rising import levels. “…one cannot ignore the elevated levels of import GST collections, which remain a nagging concern. This points to a persistent gap in domestic manufacturing capability despite the range of successful Production Linked Incentive (PLI) and Atmanirbhar Bharat interventions rolled out over the past few years,” they noted.
After accounting for refunds, which were up by 13% at nearly Rs 30,000 crore, the net GST collections increased by 15.8% to reach Rs 1,81,237 crore.
State-wise Performance
Among the states, Haryana recorded the highest growth at 28%, followed closely by Gujarat and Puducherry at 26%. Other notable performers included Karnataka and Goa with 23% each, and Maharashtra at 20% growth. Conversely, Chhattisgarh experienced a decline of 23%, with Jharkhand and Manipur also witnessing declines of 20%.
