Economy gathering momentum: GST mop-up past Rs 1.4 trillion in May too

Economy gathering momentum: GST mop-up past Rs 1.4 trillion in May too

1 Jun    Finance News

Goods and services tax (GST) collections crossed Rs 1.4-trillion mark for the third month in a row in May 2022 and came in at the fourth-highest level since the launch of comprehensive consumption tax about five years ago. The continued buoyancy in GST receipts over the last few months denotes the economic momentum is not badly hit by the external headwinds. An expansion of the tax base, reduced evasion and the elevated price levels across commodities, raw materials and finished goods are also boosting the tax collections.

According to the official data released on Wednesday, gross GST revenue in May 2022 rose 44% on year to about Rs 1.41 trillion.

Continued buoyancy in GST collections for several months in a row would help allay the state governments’ concerns about a revenue shock they might have to deal with once a five-year revenue protection period ends on June 30. For the Centre, if the trend of higher-than-estimated mop-up is sustained, its share of GST revenues would be substantially higher than the budget estimate (BE) of Rs 6.6 trillion for FY23.

GST collections accelerated even as consumption in the economy slowly recovered from the lows caused by the pandemic. Growth in private consumption expenditure slipped from 10.5% in Q1FY22 to 7.4% in Q3FY22 and further to 1.8% in Q4.

A senior official recently told FE that gross GST revenues in FY23 may be Rs 1.3-1.35 trillion a month on average (about Rs 16 trillion in the year), which could mean the Centre’s FY23 GST revenues could be about Rs 60,000 crore more than the BE, after adjusting for cess collections which are to be used mainly to service the loans taken in the last two years to bridge the states’ revenue shortfall from protected levels in FY21 and FY22.

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The average monthly GST mop-up was Rs 1.23 trillion in FY22. The Budget FY23 has conservatively estimated average monthly GST collections in the year at Rs 1.2 trillion.

Most of the large states, including Tamil Nadu, Maharashtra, Uttar Pradesh and Karnataka, reported 40-60% growth GST collections in May 2022.

“The collection in May, which pertains to the returns for April, the first month of the financial year, has always been lesser than that in April, which pertains to the returns for March, the closing of the financial year. However, it is encouraging to see that even in the month of May 2022, the gross GST revenues have crossed the Rs 1.4 trillion mark,” the finance ministry said in a statement.

Total number of e-way bills generated in April 2022 was 7.4 crore, 4% lower than in March 2022.

During May, revenues from import of goods was 43% higher and the revenues from domestic transaction (including import of services) are 44% higher than the revenues from these sources during the same month last year.

“The gross GST revenue collected in May is Rs 1,40,885 crore of which CGST is Rs 25,036 crore, SGST is Rs 32,001 crore, IGST is Rs 73,345 crore (including Rs 37,469 crore collected on import of goods) and cess is Rs 10,502 crore (including Rs 931 crore collected on import of goods),” the ministry said.

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