Gross Goods and Services Tax (GST) collection of around ₹1.5 lakh crore in February Notable in many respects. First, they mark the 12th consecutive month that GST revenue has exceeded ₹1.4 lakh crore, and the fourth highest single month since the launch of the GST regime. The average monthly GST collection in the first 11 months of 2022-23 is now Rs 1,49,776 crore, slightly higher than the average monthly collection of Rs 1.23 lakh crore in 2021-22. Interestingly, the average monthly revenue so far this year has been higher than the actual collections in those eight months, so the collections in the other three months have gone above average. Those months are April (with the highest monthly revenue of over ₹1.67 lakh crore), and October and January 2023 (whose collections were upgraded to over ₹1.57 lakh crore). The increase in these months can be attributed to quarter-end and year-end return filing, whose taxes are collected in the first month of the subsequent quarter. It bolsters the government’s claim in January that policy changes introduced in the past year have improved compliance with more taxpayers filing returns – a heartening cultural sign for a country with a low tax base.
Meanwhile, a perceptible shift is underway in the composition of GST revenue. The first 10 months of this fiscal saw a 29% increase in revenue from import of goods, while taxes from domestic transactions and import of services saw a 22% increase. While this breakdown is not available for January, February marks the second time in three months that domestic revenue has exceeded taxes from the import of goods, with the former rising 15% and the latter just 6%. While this is in line with the sharp decline in imports in January, it also indicates a possible cooling off of discretionary domestic demand which along with higher commodity prices was pushing up the import bill. Domestic revenue trends are uneven, with sharp variations across states, another cause for concern. 2023-24 budget With GST revenue growth expected to slow to 12% this year from around 22%, the tax buoyancy is expected to come down. It represents a pragmatic approach amid a world tightening its belt for recession, but the finance ministry’s attempt to play down February’s GST kitty by arguing that the “28 day” month typically sees less revenue This is fraudulent and unnecessary, as these revenue pertains to transactions carried out in the 31st day of January. By this logic, March should have seen a decline in tax flows as there were fewer activity days in February.