Consumption & compliance aided by inflation boosted GST collection in key States
As GST is a consumption-based taxation system and it affects prices of both input (consumed by the producer) and output (consumed by the consumer), both wholesale and retail inflation have an impact on GST collection. Experts find a correlation between Inflation and GST collection. Also, they expect some components of GST to be related to WPI and others to CPI.
Retail inflation, based on the Consumer Price Index (CPI), was 6.52 per cent in January this year. It then dropped to a low of 4.31 per cent in May before surging to 7.44 in July. During this period, WPI declined from 4.8 in January to (-) 4.1 in June before improving a bit to (-) 1.36 per cent in July. During this period, GST collection was between Rs 1.50 to Rs 1.6 lakh crore, reaching an all-time high of Rs 1.87 lakh crore which also had contribution from year end stock clearance.
