02-Nov-2023
2 mins read
In a recent announcement, the Finance Ministry reported a notable increase in GST (Goods and Services Tax) revenue collection for the month of October 2023. This collection reached Rs 1.72 lakh crore, marking a 13% YoY growth, and stands as the second-highest ever recorded, following April 2023.
Factors Driving the Surge
The robust GST collections in October 2023 reflect positive economic dynamics and the effective measures taken to ensure compliance and curb evasion.
Several factors contributed to this substantial increase in GST collections. These include:
- Economic Momentum: The economy’s positive momentum played a significant role in boosting GST collections, indicating robust economic activity.
- Efforts to Curb Evasion: Ongoing efforts by tax authorities to prevent tax evasion have helped in bolstering revenue collection, ensuring compliance.
- Festive Demand: Festive season demand for various goods and services led to heightened consumer spending and increased tax collection.
Comparative Figures, YoY Growth
The highest-ever GST revenue collection was observed in April 2023, amounting to Rs 1.87 lakh crore. September 2023 saw collections at Rs 1.63 lakh crore, further highlighting the positive trend in GST revenue.
The average gross monthly GST collection for the current financial year exhibited an 11% YoY growth, with a monthly average of Rs 1.66 lakh crore.
Expert Opinions
Aditi Nayar, ICRA Chief Economist, highlighted that quarter-end adjustments and the overall economic momentum contributed to the strong performance in October 2023. She expressed optimism about Central GST (CGST) collections potentially exceeding the FY24 Budget Estimate.
Parag Mehta, NA Shah Associates Partner, Indirect Tax, pointed out that factors like time-barring periods, anti-evasion measures, and increased consumer spending during the festive season have led to substantial GST collections. He anticipates further growth with the filing of annual returns for FY23.
MS Mani, Deloitte India Partner, attributed the remarkable growth in GST collections to both the underlying strong economic factors and the efforts of tax authorities in deploying data analysis tools to detect short payments and evasion.
Abhishek Jain, KPMG Indirect Tax Head and Partner, expressed enthusiasm about the mid-year surge in GST collections and suggested that the ongoing festive consumption could sustain this trend.
Saurabh Agarwal, EY Tax Partner, noted the stable GST collections and proposed that the government may consider rate rationalization as a next step in their tax policy.