India's Goods and Services Tax (GST) collections have crossed the attainment of Rs 2 lakh crore for the fiscal year 2023-24.
The noteworthy aspect of this surge is its broad-based nature, with large states across the country registering double-digit growth in tax collections during March.
Karnataka leads the pack with a remarkable 26 per cent growth rate in GST collections, closely followed by Maharashtra with a 22 per cent rise. Even Uttar Pradesh, the country’s largest state, has posted a significant 19 per cent jump, matching the performance of Tamil Nadu.
Haryana, home to Maruti Suzuki, the largest carmaker in the country, has also shown exceptional performance, recording a 23 per cent growth in GST revenue.
Industry experts stated that, "GST collections serve as a barometer for economic activities, reflecting growth across regions and sectors". MS Mani, a partner at Deloitte India, notes, “GST collection, being a transaction-based tax, it can be reasonably inferred that the growth has been across regions and sectors.”
Abhishek Jain, a partner at KPMG, attributes the increased tax collection to India's robust economic growth, which recorded an 8.4 per cent growth rate in the October-December quarter.
Finance Minister Nirmala Sitharaman has expressed confidence in achieving an 8 per cent growth rate for the Jan-March quarter, further validating the strong economic trajectory.
Economists also believe that the sharp increase in GST collections will facilitate easier management of the fiscal deficit, paving the way for a more stable growth path ahead. A lower fiscal deficit implies reduced government borrowing, leaving more capital in the banking system for corporations to invest.
This cycle stimulates economic growth and fosters job creation. Moreover, a low fiscal deficit also helps in controlling inflation, ensuring economic stability.
Aditi Nayar, Chief Economist at ICRA, remarks, “With the CGST collections surpassing the FY2024 RE (revised estimate), the implicit growth needed to meet the Interim Budget Estimate for FY2025 has come down to single-digits, which appears likely to be exceeded.”
Looking ahead, experts predict that the government may raise the target for GST collections in the main budget presentation following the Lok Sabha polls, given the remarkable jump in collections.
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