The graph
Revenues from the Goods and Services Tax (GST), which completes seven years at the end of this month, hit a record high of ₹2.1 lakh crore in April that typically sees higher inflows due to a year-end compliance rush.
Receipts in May, rising almost 10% from a year ago, compared with a 12.4% uptick in the previous month.
This was the slowest rise since July 2021 when the second COVID-19 wave had dented economic activity.
In the nearly three years since then, GST revenues have generally grown at least 11%.
Compared with the average monthly receipts of ₹1.68 lakh crore in 2023-24, taxes pertaining to the first month of this fiscal are 3% higher.
Although gross revenues from domestic transactions grew 15.3%, revenues from goods imports dipped for the second time in three months.
Domestic revenue growth has also been uneven across States, with five recording a decline in May, and eight growing far slower than the national average.
However, broader worries about GST revenues being underwhelming, voiced by the Union Finance Minister at a GST Council meeting in late 2021, have now receded.
Opportunities ahead
This is, therefore, an opportune time for the Council, to press the pedal on its pending reform agenda to make it a truly Good and Simple Tax as originally envisaged.
It is hoped the Council will also find time for bigger things such as reviving the plan to rationalise GST’s complex, multiple-rate structure.
A new rate structure might also entail lower levies on items such as cement and insurance, for instance.
A road map is also needed to bring excluded items such as electricity, natural gas, and petroleum products into the GST net to ensure businesses can avail credits for these inputs.
Along with easing compliances for smaller firms as promised in the Bharatiya Janata Party’s election manifesto, there is room for simplifying the system for all businesses, including large ones which are compelled to register in each State and face varying compliance diktats.
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