GST Collections Steady at Rs 1.70 Lakh Crore in November

In November, India's gross Goods and Services Tax (GST) collections remained flat at Rs 1.70 lakh crore, showing a modest increase from Rs 1.69 lakh crore last year. This stability follows the implementation of GST 2.0, which saw sweeping rate cuts on over 375 items effective from September 22. Despite the flat figures, there is optimism among government officials about a boost in consumption, highlighted by a notable 15% growth in the taxable value of supplies during September and October.

The overall GST collections, after accounting for refunds and excluding cess, amounted to Rs 1.52 lakh crore, a slight increase of 1.3% compared to last year. Including the compensation cess, net GST mop-up dropped by 4.2% to Rs 1.56 lakh crore. The decrease in cess collections is significant, largely due to the reduced basket of items attracting this additional tax, primarily focused on pan masala and tobacco products following the rate cuts.

Experts like MS Mani from Deloitte India suggest that while the flat GST collections were anticipated due to the rate cuts, a consumption boost was expected. He noted that the gross GST collections, excluding cess, have remained largely unchanged year-on-year, indicating that the impact of the rate reductions has been tempered by increased consumer spending, though not as robust as hoped.

Pratik Jain from Price Waterhouse & Co LLP echoed these sentiments, stating that the November collections reflect a full month of impact from GST 2.0. As demand continues to rise, there is an expectation of improving collections in the upcoming months. Officials highlighted strong performance in sectors where rate rationalization occurred, such as fast-moving consumer goods and pharmaceuticals, where lower GST rates have translated into increased consumer spending.

Sector-wise data reveals substantial growth in taxable supplies, with industries like cement and pharmaceuticals showing impressive year-on-year increases. For instance, the taxable value of supplies for these sectors has seen growth rates significantly above previous years, confirming that reduced GST rates are encouraging higher spending.

With the introduction of GST 2.0, the tax structure was simplified to just two slabs of 5% and 18%, along with a special rate for luxury goods, which aims to streamline compliance and enhance revenue generation. As the government aims to meet fiscal targets, the next few months will be crucial in assessing the long-term impact of these changes on GST collections and overall economic growth.