GST Collections Increased in The Month of October. Why So?

In the month of October, the Gross Goods and Services Tax collection increased by 13.4 percent, i.e., to Rs 1.72 lakh crore. This proves to be the second highest surge since the year 2017 when the indirect tax regime came up. It is the Finance Ministry that has released the information on Wednesday. The sharp surge in the Gross GST could be possibly due to an improvement in economic activity, and dispute settlement by businesses.

What are the GST numbers and what do they signify?

During the time frame of April to October 2023, it is at Rs 1.66 lakh crore per month that the total GST revenue collections have averaged. Earlier, during the time frame of April to October 2022, the monthly average of GST revenue collections was seen to be Rs 1.49 lakh crore.

In the month of October, the total GST collections were seen to be Rs 1,72,003. This proves to be the highest year-on-year surge rate in 10 months. If we talk about the proportions, then the Central GST stood at Rs 30,062 crore, the State GST stood at Rs 38,171 crore, and the Integrated GST stood at Rs 91,315 crore. Moreover, the cess was Rs 12,456 crore.

From the very same month last year, the revenues out of domestic transactions were seen to be 13 percent higher, as per the statement by the Finance Ministry. In the month of October, Rs 36,614 crore were settled to the State GST and Rs 42,873 crore to Central GST from Integrated GST, by the government. Therefore, the total revenue for October post the settlement was seen to be Rs 74,785 crore for the State GST and Rs 72,934 crore for the Centre.

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What could be the reasons behind this increase in GST revenue?

The GST authorities have sent some notices relating to the underpayment or recovery of tax non-payment, and it is seen that a few businesses have settled disputes by making payments. Experts suggest that the government could potentially think of rate rationalization as the next step under GST.

As per the Indirect Tax Head & Partner, KPMG, Abhishek Jain, the huge increase in the collection could possibly be associated with dispute settlement for the financial year 17-18, because the normal period of limitation ceased on 30th September. A mid-year collection of a surged number like this deserves celebration. Moreover, he also says that the ongoing and upcoming consumption due to festivities could help in its continuation.

MS Mani, who is a Partner in Deloitte India stated that the increasing emphasis on audits hailing for specific data found on multiple databases had led to a huge increase in compliance across states and sectors. This, thus, can also be seen in the increase in the GST collections across important manufacturing and consuming areas.

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