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Indian Economy Records Highest GST Collections in FY24, Reflecting Strong Growth

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India concluded the fiscal year 2023-24 with a landmark achievement in the realm of goods and services tax (GST) collections, showcasing robust economic expansion and administrative efficacy. In a stellar performance, FY24 witnessed the highest GST collections since the inception of the indirect tax regime in July 2017.

The Union Finance Ministry announced that the gross GST collections for FY24 totaled ₹20.18 trillion, marking an 11.7% surge from the preceding year, with the ministry hailing the performance as both ‘strong’ and ‘consistent.’ March 2024 alone saw collections reaching ₹1.78 trillion, up 11.5% from the equivalent period a year ago.

The 11.7% upsurge in GST collections in FY24 outpaced the nominal gross domestic product (GDP) growth forecast of 9.1% for the same fiscal year by the Statistics Ministry, underscoring the buoyancy in GST revenue accruals. Notably, the Statistics Ministry’s second advance estimate of GDP projected a 15.5% growth in net tax on products for FY24, surpassing the 10.6% expansion in the preceding year.

Saurabh Agarwal, a tax partner at EY India, expressed optimism about the potential for continued high GST collections in the upcoming quarter, especially with the approaching general election on the horizon. He highlighted that India’s economic growth trajectory would continue to bolster GST revenue accumulation in the forthcoming quarters.

The Centre’s central GST collection for FY24, post the settlement for inter-state sales, crossed the revised estimate of ₹8.12 trillion as per the Union Budget presented in February. After accounting for refunds, the GST revenue for March 2024 stood at ₹1.65 trillion, reflecting an 18.4% uptick year-on-year. The Finance Ministry attributed this surge to a substantial rise in revenue garnered from domestic transactions, indicating the robust conditions prevalent in the domestic market.

In March, the Centre amassed ₹77,796 crore, while the states collected ₹81,450 crore following the settlement of taxes on inter-state trade. During the month, collections from the GST cess, imposed on automobiles, tobacco, and aerated drinks, totaled ₹12,259 crore, inclusive of ₹996 crore collected on imported goods. February had witnessed a 13% year-on-year growth in automobile sales, as confirmed by the Federation of Automobile Dealers Associations last month, with taxes for those sales accruing in March.

For FY24, the average monthly GST collection amounted to ₹1.68 trillion, surpassing the average of ₹1.5 trillion recorded in FY23. Post-adjustment for refunds, the FY24 GST revenue stood at ₹18.01 trillion, showcasing a 13.4% growth year-on-year. The strong revenue collection growth is anticipated to alleviate the pressure of tax enforcement measures on businesses, according to experts.

Ankur Gupta, the practice leader of indirect tax at tax and audit firm SW India, emphasized the importance of maintaining a balance between enforcement and compliance facilitation. He highlighted the potential for a reduction in routine notices and scrutiny for businesses, forecasting a conducive environment for operational ease in the future.

Official estimates project India’s economy to expand by 7.6% in the current fiscal year, with government economists being optimistic about the growth potential surpassing these projections.

Rachel Adams

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