GST collection high a result of maturing system
The goods and services tax collection crossing ₹2 lakh crore in May came in as a surprise. It's only the third time the gross monthly GST revenues have crossed the mark, that too at a time of immense economic uncertainty. The May high flows from transactions carried out in April, the month when Donald Trump triggered a major upheaval in global trade with his wavering 'reciprocal' tariff announcements. The latest figures show that despite the heightened uncertainty, domestic economic activities remained buoyant. Even trade picked up, as shown by a 25 percent growth in revenue from imports. The double-digit growth in GST is an indication of not just stronger economic activity, but also of a maturing tax system in which compliances are less burdensome and tax leakages fewer.
The total collection in May rose 16.5 percent, with revenues from domestic transactions growing by 14 percent to ₹1.5 lakh crore, while revenues from imports increased by a quarter to ₹51,000 crore. The net GST revenues, after deducting refunds from the gross collection, showed even better buoyancy as it increased by 20.4 percent to ₹1.74 lakh crore. The fact that the gross revenues in the first two months of the current financial year witnessed double-digit growth is significant, as collections in 2024-25 had shown a worrying trend of fatigue. Revenue growth in 2024-25 failed to cross the double-digit mark as the gross collection increased by only 9.4 percent.
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