A reform window: On the GST trajectory

The financial year 2023-24 appears to have ended on a high on the revenue front. Net direct tax collections rose 19.9% by mid-March to hit 97% of revised Budget targets, while the Goods and Services Tax (GST) has yielded a robust Rs. 20.18 lakh crore. Gross GST revenues in March, for transactions undertaken in February, crossed Rs. 1.78 lakh crore, the second highest tally since the rollout of the indirect tax six and a half years ago.

The only month when collection stood higher was in April 2023, aided by year-end compliances. There is a good chance the same compliance effects will lift this month’s tally past Rs. 2 lakh crore, marking a fresh high. Average monthly collections have grown 11.6% in 2023-24 to over Rs. 1.68 lakh crore. The growth may be lower than the previous year’s 21.8% uptick but establishes a new normal for revenues that the coming year can build on.

This should settle the Centre’s concerns that the GST has not yielded expected returns. Central GST collections in 2023-24 have overshot revised estimates presented in the interim Budget and the Finance Ministry may have to revise its 2024-25 targets when it presents the full Budget as those can now be achieved even if growth slips below 10%.

Source : https://www.thehindu.com/opinion/editorial/a-reform-window-on-the-gst-trajectory/article68020253.ece