GST Collections Up 7.3% In December, But Sequential Fall Continues

India's goods and services tax collections in December increased on an annual basis but slipped sequentially—a trend that was also observed in the preceding months as well.

The GST collections grew 7.3% year-on-year to Rs 1.72 lakh crore in December, according to the data released by the government on Wednesday.

The central GST collections stood at Rs 32,800 crore, whereas the state GST collections came in at Rs 40,500 crore. The integrated GST mop-up stood at Rs 91,200 crore, whereas the total cess collected during the month was Rs 12,300 crore.

The year-on-year growth was mainly on account of domestic transactions, which grew 8.4% to Rs 1.32 lakh crore, while revenue from tax on imports rose about 3.9% to Rs 44,268 crore.

Data also suggest that growth by CGST formations in GST revenue is 10.8%, and SGST formations are 9.6%, indicating disparity in taxpayer allocations.

Meanwhile, refunds rose 45.3% from the year-ago period to Rs 22,490 crore, the data showed. After adjusting refunds, the net GST collection increased by 3.3% to Rs 1.54 lakh crore in December.

In November, the GST collections rose 8.5% year-on-year to Rs 1.82 lakh crore while falling sequentially. In October, the mop-up stood at Rs 1.87 lakh crore, the second-highest ever on account of higher sales and improved compliance.

So far this fiscal, the exchequer has mopped up Rs 14.44 lakh crore in GST.

Experts said that December GST collections are well in line with expectations amid a decline in consumer spending over the past few months.

"GST collections growth of 7.3% is in line with a bit of a slowdown in GDP growth. As is expected that the GDP growth will inch north in this quarter, the GST collections should mirror the same," said KPMG's Indirect Tax Head & Partner Abhishek Jain.

Andaman and Nicobar Islands was among the states and Union Territories to see the highest growth of 72% in GST revenues during December. It was followed by Sikkim and Haryana with a growth of 30% and 28% growth, respectively.

Lakshadweep saw a 54% decline in the GST collection will Arunachal Pradesh and Chandigarh saw a dip of 27% and 20%, respectively, in December.

The below 5% increase in major states like UP, Bihar, West Bengal, Gujarat, and Madhya Pradesh would be an area of concern for policymakers who may be considering the sectoral breakdown of the GST collections in these states to understand the reasons for the same.

“The government is providing more GST refunds for exports, signifying an increase in the volume of goods and services we are selling to other countries. Simultaneously, we are observing a lower growth in GST collected on imports, where the growth appears to be partly influenced by the rise in the value of the dollar compared to last year,” said EY's Tax Partner Saurabh Agarwal, adding that this suggests that India is reducing its reliance on products manufactured abroad.