TRENDS IN GST COLLECTION- APRIL, 2023

[Dr. Sanjiv Agarwal]

April, 2023 has registered a revenue collection (GST) at Rs. 187 lakh crore, which is the highest ever since introduction of GST in July, 2017. GST revenue for April, 2023 are 12 percent higher than April, 2022. Also, this April saw the highest single-day collection of Rs. 68,228 crore through 9.8 lakh transaction on the 20^th, the due date for filing the GSTR-3 return Form (which shows actual tax payment after deducting input tax credit or ITC from gross tax liability. Prime Minister commented an this feat stating that “Great news for the Indian economy! Rising tax collection despite lower tax rates shows the success of how GST has increased integration and compliance”. This indicates economic recovery, better discipline amongst taxpayers and improved compliance.

Since the April, 2023 collections indicate March business, there is a likelihood of momentum being not the same in next few months as March is the last month of financial year which is known for higher business trend and many year-end transactions are recorded due to annual closing, inter branch settlement etc. GST tax collection in next 2-3 months may show a little declining trend as the April collections are a reflection of March business as recorded by taxpayers in their books and taxes thereon paid in April, 2023. The first quarter of year is otherwise generally lean from turnover point of view barring few sectors such as tourism, FMCG etc. The ongoing IPL like events will however, add to overall kitty of GST collection.

State wise GST contribution

In 13 states, GST growth in April, 2023 vis-à-vis April, 2022 is more than 20% with smaller states showing growth of upto over 60% . A look at following table showing this:

State	April, 2022 (Rs. in crore)	April, 2023 (Rs. in crore)	Growth (%)
Jammu & Kashmir	560	803	44
Haryana	8,197	10,035	22
Uttar Pradesh	8,534	10,320	21
Sikkim	264	426	61
Arunachal Pradesh	196	238	21
Nagaland	68	88	29
Manipur	69	91	32
Mizoram	46	71	53
Tripura	107	133	25
Madhya Pradesh	3,339	4,267	28
Maharashtra	27,495	33,196	21
Karnataka	11,820	14,593	23
Goa	470	620	32
Ladakh	47	68	43

Of the above list, it can be noted that Sikkim tops the growth @ 61% followed by Mizoram, Ladakh and Jammu & Kashmir. Most of them are hill- north east small states. A perusal of State-wise performance reveals that only one state / UT, Lakshadweep has shown a negative growth of -7% while 11 states have recorded a single digest growth – others have shown a tax growth of 11-20%.

Few states and revenue authorities need to analyze the growth trends of smaller states / UTs. The growth may be result of more people coming into GST fold and lesser evasion in such states.

Highlights of April, 2023 GST Collections

• GST revenue collection for April 2023 is the highest ever at Rs 1.87 lakh crore
• The gross GST revenue collected in the month of April, 2023 is Rs.  1,87,035 crore of which CGST is Rs.  38,440 crore , SGST is Rs.  47,412 crore , IGST is Rs. 89,158 crore (including Rs. 34,972 crore collected on import of goods) and cess is Rs.  12,025 crore (including Rs. 901 crore collected on import of goods).
• Gross GST collection in April 2023 is an all time high, Rs 19,495crore more than the next highest collection of Rs. 1,67,540 crore, in April, 2022.
• GST revenues for April, 2023 are 12% higher than the GST revenues Y-o-Y basis.
• Highest tax collected on a single day ever is reported at Rs. 68,228 crore through 9. 8 lakh transactions recorded on 20th April, 2023.
• For the first time, gross GST collection has crossed Rs. 1.75 lakh crore mark. Total number of e-way bills generated in the month of March 2023 was 9.0 crore, which is 11% higher than 8.1 crore e-way bills generated in the month of February, 2023.

Signals from GST Collection

Rising tax collection of GST indicates that there is an uptrend in Indian economy resulting in more value added, both in goods and services. It inter alia signifies:

• Better tax compliances including payment and filing of returns.
• Previous fiscal 2022-23 ending up on a positive and promising note as the April collections are the reflection of business activities of March, 2023.
• Indian economy is integrating and expanding throughout the country.
• Higher tax collection calls for a need to further rationalize tax rates to optimize tax collections by way of lowering rates vis-à-vis expanding the tax base.
• There may be lesser or no short-fall of GST revenue for the States in future, thereby resulting in no need for compensation to states.
• There is a macro level growth of tax revenue, both across states as well as sectors including goods and services.
• Tax collection to be taken as base for rate rationalization and minimizing  exemptions.
• Tax collection will be positively impacted by anti-tax evasion measures by tax authorities, scrutiny and audits and more use of data analytics & use of artificial intelligence.
• However, continued inflation may also have a direct bearing on tax revenue.

Correlation between direct tax collection and GST collection could also reveal some pointers if there is a wide variation between the two, which may be further analyzed.

GST collection in future would much depend upon two crucial factors – inflation which is currently in range of 5.5-6.5 percent and GDP growth rate which may be 6-7 percent. That being the scene, even if GST collection grows @ 12 percent as projected in budget, the effective growth would be one percent only.  Further rationalization of tax rates and exemptions could pave the way for sustained and steady growth of GST revenue.