The government on Friday released the Goods and Services Tax (GST) collection data for the month of March, which have two important messages – the new indirect tax regime, which was launched on July 1, 2017, has now undoubtedly matured; and a sustained rise in consumption tax for 12 consecutive months despite global headwinds underscores the resilience of the Indian economy.
Before long, hitting the ₹1,000 crore mark per month seemed ambitious. In the year GST was launched in 2017–18, the highest monthly collection was ₹95,600. The next year (2018–19), the monthly collection of CZK 1,000,000 was exceeded only four times. Seven times in the next fiscal year (2019-20). Then came the Covid-19 pandemic which devastated the Indian economy in April 2020 with an all-time low collection of ₹32,172 crore.
In 2020-21, Prime Minister Narendra Modi’s emergency measures were taken – free food and fuel for the poor, direct cash transfer to the vulnerable, free vaccines for all citizens, etc. Finance Minister Nirmala Sitharaman responded to the current need by providing a stimulus to the economy in a calibrated manner. Instead of doles, it focused on productive unsecured credit instruments that provide a lifeline to businesses, especially micro, small and medium enterprises (MSMEs). The result was swift and visible as GST collections bounced back to the psychological level of ₹1 lakh in October 2020. The level was not only regained, but maintained – for six consecutive months until the end of the financial year on 31 March 2021.
Business activities picked up quickly in the next financial year (2021-2022), which was evident from the stronger monthly GST collection. Except for May and June 2021, GST receipts were robust every month and closed March 2022 at over ₹ 1.42 crore, a record so far. FY23 was exceptionally good – starting at an all-time high of ₹ 1.67 crore in April 2022 and ending at the second highest ever at ₹ 1.60 crore in March 2023.
According to the latest official statement issued on Saturday, the total gross collection for 2022-23 stood at over ₹ 18 crore, a 22% year-on-year jump, and the average monthly gross collection for the entire year was ₹ 1.51 lakh. crore. The quarterly analysis also pointed to strong business activity. The average monthly gross GST collection for the last quarter of the fiscal year 2022-23 rose to ₹ 1.55 crore as against the average monthly collection of ₹ 1.51 crore in the first quarter, ₹ 1.46 crore in the second quarter and ₹ 1.49 crore in third quarter 2022-23.
The progressive growth in GST collection since its launch on 1 July 2017 proves that the new indirect tax regime has come of age. This is the answer to the naysayers that such a large-scale reform that unified the entire domestic market requires patience. Despite sharp criticism from the opposition over the hasty implementation of GST, the Modi government has engaged and worked with stakeholders to make it happen. The government’s patience finally paid off.
GST is a consumption tax, hence it is one of the high frequency indicators of economic health. As the major economies of the world face headwinds due to unprecedented inflation (mainly due to their big elections to stimulate their economies after the Covid pandemic), India is relatively safe. While advanced economies are slowing down, India is still one of the fastest growing major economies.
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