January 2, 2025
Experts attributed the muted growth to a post-festive season slowdown and a rise in refunds, which totalled INR 22,490 crore in December, up 45.3% from last year
Gross domestic GST collections increased 8.4% to INR 1.32 lakh crore, while cess collections dipped to INR 12,003 crore
The slowdown in consumption and GDP growth, which dropped to 5.4% in the September quarter, are seen as contributing factors
Major states like UP, Bihar, and Gujarat witnessed below 5% growth, raising concerns for policymakers over sectoral breakdowns
Official data revealed that India’s Goods and Services Tax (GST) collections rose 7.3% year-on-year to INR 1.77 lakh crore in December, slowing from the 8.5% growth in November. Tax experts said the deceleration was attributed to a post-festive consumption dip and a sharp refund rise.
Gross domestic GST collections grew 8.4% to INR 1.32 lakh crore, but cess collections saw a marginal decline, settling at INR 12,003 crore. Refunds surged to INR 22,490 crore in December, marking a significant 45.3% year-on-year increase. After accounting for these refunds, net GST collections stood at INR 1.54 lakh crore, representing a modest 3.3% increase.
Saurabh Agarwal, a tax partner at EY, remarked that the collection slowdown aligns with seasonal trends and reduced consumer spending in recent months. Pratik Jain of PwC suggested that measures to stimulate consumption might be introduced in the upcoming budget to counter this trend.
The slowdown reflects broader economic trends, with GDP growth falling to 5.4% in September, the lowest in seven quarters. However, recent improvements in the performance of eight core infrastructure sectors, which grew by 4.3% in November, signal potential recovery.
State-wise data presented mixed results, with some key states, including Uttar Pradesh, Bihar, Gujarat, and West Bengal, reporting less than 5% growth in collections. Deloitte’s MS Mani called for a sectoral analysis to identify the root causes of these sluggish figures.
Revenue from imports rose by 3.9% to INR 44,268 crore, likely influenced by a stronger dollar than last year. Despite the challenges, the overall gross GST collections from April to December rose 9.1% year-on-year to INR 16.33 lakh crore.
Experts remain cautiously optimistic, linking GST collection trends to GDP growth projections. Abhishek Jain of KPMG noted that an anticipated rise in GDP growth in the coming months could lead to a rebound in GST collections, aligning them with economic recovery.
Source: Economic Times