India’s gross revenues from the Goods and Services Tax (GST) hit a three-month high to cross ₹1.65 lakh crore in July. However, at 10.8%, it was the slowest uptick in collections since July 2021 compared to revenues from the same month last year.
Revenues from domestic transactions and services imports grew 15% in July, which marked the fifth occasion that GST revenues have crossed the ₹1.6-lakh-crore mark during a month. Sequentially, July’s collections, for transactions undertaken in June, were 2.2% higher than the previous month’s GST kitty.
The Finance Ministry did not disclose the trend for GST collections on import of goods, but back-of-the-envelope calculations indicate that there was a 0.8% decline in July from a year ago. Integrated GST collections on goods imports dropped by 0.43% to ₹41,239 crore, while GST Compensation Cess levies on goods imports dropped 15.6% to ₹840 crore.
Overall GST Compensation Cess levies, which will continue till at least March 2026 to repay market borrowings made amid the pandemic to compensate States, grew 7.9% in July to touch nearly ₹11,780 crore.
Central GST or CGST collections in July stood at ₹29,773 crore, while State GST (SGST) yielded ₹37,623 crore. The total IGST collection came to ₹85,930 crore, with around 52% of that revenue coming from domestic transactions.
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“The government has settled ₹39,785 crore to CGST and ₹33,188 crore to SGST from IGST. The total revenue of the Centre and the States in the month of July 2023 after regular settlement is ₹69,558 crore for CGST and ₹70,811 crore for the SGST,” the Finance Ministry said.
While overall domestic revenues grew 15%, as many as 18 States recorded 15% or higher growth, while 11 States grew at a slower pace.
Strife-torn Manipur was the only State to record a contraction, with a 7% drop in revenues. However, the north-eastern States of Mizoram (47%), Meghalaya (27%), Sikkim (26%), recorded the highest growth in revenues, followed by Delhi (25%), Uttar Pradesh (24%) and Tripura (23%).
At the other end of the spectrum, Nagaland, with a 3% rise in revenues, Chhattisgarh with 4%, and Andhra Pradesh (5%) saw the weakest growth, followed by Gujarat and Telangana, both of which clocked a 7% growth.
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“The past trend of six key States generating almost 60% of the nationwide GST collections continues in the current month as well,” noted MS Mani, partner at Deloitte India, adding that compliance drives from the Revenue department were yielding results with steady revenue trends.
The ₹1.6-lakh-crore monthly collection mark may be the new norm for GST revenues, said Abhishek Jain, partner and national head for indirect tax at KPMG, who said revenues might rise further with the upcoming festival season and the approaching “normal period of limitation” for 2017-18 assessments.
Mandatory e-invoicing for all firms with a turnover of ₹5 crore, which kicks in this month, is also expected to bolster revenues, though it may pose some transition challenges for smaller businesses.
“Smaller taxpayers may have trouble embracing the new compliance paradigm, but it would ultimately expedite operations, improve transparency, and encourage more transactions with larger businesses, despite the transition’s potential difficulties,” said Saloni Roy, partner at Deloitte India.