India’s gross GST collections for October 2023 stood at Rs 1.72 Lakh crore, marking a 13.4% increase from the previous year. Six years since its introduction, the Goods and Services Tax (GST) system has contributed to enhanced tax buoyancy, streamlined logistics, improved tax administration, and increased formalization of the economy. The sustained growth in tax collections reflects economic resilience amid global macroeconomic and geopolitical uncertainties.
Positive Fiscal Position
The fiscal year’s gross GST collections, totaling Rs 1.66 Lakh crore, exhibit an 11.4% growth compared to the same period last year. While the growth rate has moderated from the post-pandemic recovery years, the overall Compound Annual Growth Rate (CAGR) of ~11% since FY19 surpasses nominal GDP growth (~9.5%). This trend underscores the increasing formalization of the economy.
GST’s Evolution: A Unifying Force
The implementation of GST aimed to realize the vision of “One Nation, One Tax,” unifying and centralizing taxes on goods and services. The transformation has led to increased transparency, formalization, and a reduction in the compliance burden on taxpayers. The GST Council’s unique federal structure and the use of technology, including Data analytics, Artificial Intelligence, and RFID Tags, have played pivotal roles in achieving these objectives.
Effective Measures Against Tax Evasion
Efficient handling of fake GST invoices has contributed to revenue growth. Measures such as early identification of suspected entities, anti-evasion drives, and investigations have been instrumental. The GST Council’s continuous assessment and correction of inverted structures and tax loopholes, along with standardized rates, have encouraged businesses to join the tax net.
Structural Resilience Amid Global Headwinds
Despite global challenges, India’s economy has demonstrated remarkable resilience, reflected in high-frequency indicators and robust GST collections. Ongoing efforts to address challenges in the system, coupled with structural reforms, indicate a collective commitment to the economy’s structural resilience.