Goods and services tax collections rose 11.6% in December to reach a record Rs.1.15 lakh crore on the back of higher demand, partly due to Diwali, improved compliance and higher prices of some goods.
Latest data released showed collections in December, which were for sales and transactions in November, were higher than the previous high of Rs.1.13 lakh crore, recorded in April, 2019. It also marks three straight months of over Rs.1 lakh crore collections. “This is the highest growth in monthly revenues in the last 21 months. This has been due to a combined effect of the rapid economic recovery post-pandemic and the nationwide drive against GST evaders,” the finance ministry said.
The ministry added that the drive against fake bills, along with many systemic changes introduced recently, has also led to improved compliance and hence growth in GST collections.
What seems to have helped was record monthly filing of returns, estimated at 87 lakh, which was 7% higher than December 2019. The government’s decision to closely monitor tax credits and a crackdown on fraudulent transactions has helped, even as the economy hasn’t fully returned to pre-Covid levels.
While sectors such as automobiles, white goods, electronics and consumer goods have seen a strong comeback in demand, there are several sectors such as hospitality and tourism that are yet to see a return of normalcy. Besides, the collections in December were driven by a 27% increase in collections from imports, whose volume was estimated to have declined by over 13% in November, according to data released by the commerce department earlier.
“Robust growth in GST collections, even after the festive season is over, is a clear signal that businesses are leaving the ghost of COVID behind now... Significant jump in GST on imports could indicate revival in demand on high end products like cell phones and electronic items. Apart from economic revival, the reason for this growth could be tightening of compliances with measures such as e-invoicing and increased investigations to catch tax evaders even though GST audits for 2017-18 and 2018-19 are yet to start in a big way,” said Pratik Jain, who leads the indirect tax practice at consulting firm PwC India.