GST collection at 5-month high in Sept; above Rs 1.1 lakh for third straight month

The goods and services tax (GST) collection recovered to a five-month high in September, exceeding the Rs 1.1 lakh crore mark for the third straight month with economic activity picking up pace across the country, emerging from the disruption caused by the second Covid-19 wave, official data showed on Friday.

Sustained robust revenues provide cushion to the government and help it ramp up spending to ensure economic revival.

The GST mop-up in September stood at Rs 1.17 lakh crore as against Rs 1.12 lakh crore in August, according to the data released by the finance ministry. The latest numbers pertain to transactions done in the month of August. The collection in September is 23 per cent higher than the levels seen in the corresponding month last year and a 27 per cent growth when compared to 2019-20.

The September data complements the daily e-way bill generation in August, which also recovered to a five-month high. E-way bill generation, which indicates supply in the economy, recovered to 6.58 crore in August compared to 6.41 crore in July.

The average monthly gross GST collection for the second quarter of the current year has been Rs 1.15 lakh crore, which is 5 per cent higher than the average monthly collection of Rs 1.10 lakh crore in the first quarter of the year.

"This clearly indicates that the economy is recovering at a fast pace. Coupled with economic growth, anti-evasion activities, especially action against fake billers have also been contributing to the enhanced GST collections. It is expected that the positive trend in the revenues will continue, and the second half of the year will post higher revenues," the finance ministry said in a press statement.

During the month, revenues from import of goods were 30 per cent higher compared to last year and the revenues from the domestic transactions (including import of services) were 20 per cent higher than the revenues from these sources during the same month last year

Aditi Nayar, chief economist, ICRA said that although the pace of growth eased relative to the 30 per cent logged in August 2021, this owes to a normalising base.

"The release of GST compensation cess of Rs. 22,000 crore will benefit the states' cash flow situation, allowing accelerated spending in Q3 FY2022, complementing the expected boost to central government spending after the easing of cash management guidelines," added Nayar.

The GST mop-up had fallen below the Rs 1 lakh crore mark for the first time in eight months in June, with large parts of the country facing localised lockdowns to contain the spread of the COVID-19 pandemic.

In April this year, the collection stood at a record high of Rs 1.41 lakh crore. The GST Council had in its meeting on September 17 tasked a Group of Ministers (GoM) led by Karnataka Chief Minister Basavaraj S. Bommai to look into rationalisation of tax rates and consider the merger of different tax slabs within two months with the objective of boosting revenue collections post June 2022, when states will stop getting compensation for revenue losses.

The economy posted a 20.1 per cent growth in the first quarter of the fiscal on a low base of the last year and is estimated to expand by around 7 per cent in the second quarter.

Manufacturing states such as Tamil Nadu, Maharashtra, and Karnataka have posted an over 20 per cent growth in collections compared to last year. Odisha posted a 40 per cent growth over the same period last year.

Key segments of GST collection yielded more in September compared to August. For instance, the central GST collection stood at Rs 20,578 crore compared to Rs 20,522 crore in August. State GST mop-up was Rs 26,767 crore as against Rs 26,605 crore in the previous month. The compensation cess was Rs 8,754 crore, up from Rs 8,646 crore in July.

During September, the government settled Rs 28,812 crore to CGST and Rs 26,767 crore to SGST from IGST as regular settlement.
 
The government has been managing robust GST collections due to tightened enforcement through closer monitoring against fake billing, deep data analytics using data from multiple sources including GST, income-tax and customs IT systems and effective tax administration. Easier compliance also encouraged return filing.

Also read: GST revenue collection for Aug touches Rs 1,12,020 crore

Also read: GST Revenue collection for Sept at over Rs 1.17 lakh cr