The Goods and Services Tax (GST) has been a cornerstone of fiscal reform in India. The shift to GST aimed to dismantle the complex, multilayered national tax structure and replace it with a more transparent, technology-driven, and efficient system.As a significant indicator of economic activity and compliance, GST revenue collections not only reflect the health of the economy but also the effectiveness of the tax system in enhancing the ease of doing business. Below is a detailed analysis of GST revenue collections that provides valuable perspectives on the tax system's impact on different sectors and regions.
What is GST in India?
GST, i.e., Goods and Services Tax in India, is a multi-stage, comprehensive, destination-based monetary tax levied on every value-addition practice in the supply chain. It was implemented on July 1, 2017, under the Finance Ministry of India, aiming to make the country a unified common market. Here are some key highlights of GST:
- GST is levied at each production and distribution stage, allowing input tax credits to offset previous payments. Ultimately, consumers bear the tax embedded in the final prices of goods and services.
- GST rates range from 0 percent to 28 percent, depending on item necessity, ensuring affordability for essential goods. Special schemes like the composition scheme simplify compliance for small businesses by allowing fixed turnover rate payments.
- GST offers exemptions for certain businesses, such as education and healthcare. It's a destination-based tax, collecting revenues in the consuming state and promoting equity across states by aligning tax collection with consumption locations.
GST revenue collections in May 2024
In May 2024, GST revenue collections stood at Rs1.73 lakh crore, a notable 10 percent year-over-year growth. After accounting for refunds, the net GST revenue stood at Rs 1.44 lakh crore, reflecting a 6.9 percent growth compared to the previous year.Breakdown of May 2024 GST Revenue Collections in India:
- Central Goods and Services Tax (CGST): ₹32,409 crore;
- State Goods and Services Tax (SGST): ₹40,265 crore;
- Integrated Goods and Services Tax (IGST): ₹87,781 crore, including ₹39,879 crore collected on imported goods;
- Cess: ₹12,284 crore, including ₹1,076 crore collected on imported goods.
GST revenue collections of May 2024 vs GST revenue collections of April 2024
| Component | March 2024 collections (in crore) | April 2024 collections (in crore) |
|---|---|---|
| Total GST Collection | ₹1,73,000 | ₹2,10,000 |
| CGST | ₹32,409 | ₹43,846 |
| SGST | ₹40,265 | ₹53,538 |
| IGST | ₹87,781 (including ₹39,879 from imports) | ₹99,623 (including ₹37,826 from imports) |
| Cess | ₹12,284 (including ₹1,076 from imports) | ₹13,260 (including ₹1,008 from imports) |
| Growth Rate (YoY) | 10 percent | 12.4 percent |
Top 10 states contributing the highest GST revenue collection in 2023-24
Below is the GST revenue collection data for the top 10 states, based on cumulative revenue collections over the last ten months from 2023 to 2024. This ranking is derived from the data sourced from the Press Information Bureau. Note: The top 10 listings are based on 10-month data, as the GST Council did not release state-wise collection data for October 2023 and January 2024.
| State/UT | Total (in Rs. Crores) |
|---|---|
| Maharashtra | 302,317 |
| Karnataka | 135,953 |
| Gujarat | 117,771 |
| Tamil Nadu | 113,174 |
| Haryana | 96,745 |
| Uttar Pradesh | 96,421 |
| Delhi | 60,689 |
| West Bengal | 59,775 |
| Telangana | 55,863 |
| Odisha | 51,509 |
Contribution of GST to total revenue
Since its introduction in July 2017, the Goods and Services Tax (GST) has transformed India's tax landscape. By subsuming multiple cascading taxes into a single tax system, GST has enhanced revenue collection by broadening the tax base and improving compliance through its streamlined and technology-driven processes. The system's design promotes greater transparency and reduces the chances of tax evasion, as its input tax credit mechanism incentivises businesses to report transactions accurately.GST provides a major source of fiscal revenue that supports various developmental and welfare projects across the country. It accounts for a significant percentage of the total tax revenue, reflecting its importance in achieving fiscal consolidation. According to the interim Budget 2024-25 documents, for every rupee in the government treasury, 63 paise will come from direct and indirect taxes. Among indirect taxes, the Goods and Services Tax (GST) will contribute the maximum, with 18 paise in every rupee of revenue.Generated ST revenue supports the central and state governments in funding essential services such as healthcare, education, and infrastructure and plays a crucial role in balancing fiscal deficits and ensuring economic stability. By aligning state and central tax structures, GST promotes cooperative federalism, a more equitable distribution of tax revenues among states, and improved overall economic integration within the country.
FAQs:
What are the four slabs of GST?The four slabs of GST are 5 percent, 12 percent, 18 percent, and 28 percentWho audits GST?GST audits are conducted by either Chartered Accountants or Cost Accountants if the business turnover exceeds a specified threshold. The government tax authorities can also conduct audits to verify the correctness of GST returns and compliance with GST regulations with the help of the GST Audit Manual. How is GST calculated?GST is calculated by adding the applicable percentage rate to the selling price of goods and services. The formula to calculate GST is:GST Amount = (Original Cost * GST Ratepercent) / 100The total amount to be paid is the sum of the original cost and the GST amount.
Subscribe Now
