GST collections rose 28% to Rs 1.49 lakh crore in July, making it the second highest monthly collection since the new tax regime kicked in a little over five years ago.
The July numbers, which represent transactions in June, were bolstered by buoyant imports with revenues from that segment increasing 48%, compared to a 22% growth from domestic sources. While economists said the numbers indicate strong economic activity with the collections set to surpass Budget estimates, providing much needed fiscal comfort to the Centre as well as the states.
“These consistent high collections indicate recovery from the pandemic hit and can also be attributed to inflation and tight check and balances implemented by the government. Further, with rationalisations being implemented subsequent to the recent GST Council meet, these numbers may further go up in the coming months,” said Abhishek Jain, indirect tax partner at consulting firm KPMG in India.
Other numbers, such as auto sales and the Purchasing Managers’ Index for July, along with the core sector data, released on Friday, suggested that economic activity was holding up last month.
The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index rose from 53.9 in June to 56.4 in July, reflecting the strongest improvement in the health of the sector in eight months. The July PMI data pointed to an improvement in overall operating conditions for the 13th straight month.
The latest GST numbers put the average collections during the first four months of the fiscal at over Rs 1.5 lakh crore. Some tax experts suggested that the government should use the current situation to push ahead with rationalisation of rates.