Revenues from domestic transactions grew 13.4%, the Finance Ministry said, while goods imports yielded an 8.3% uptick in the indirect tax collection. File
| Photo Credit: K.V.S. Giri

Year-end compliances lifted India’s gross Goods and Services Tax (GST) revenues past a record ₹2.1 lakh crore in April, reflecting a 12.4% growth over the previous highest tally of ₹1.87 lakh crore in the same month last year. Taking refunds into account, GST revenues for the month were at ₹1.92 lakh crore, 15.5% higher than the collection in April 2023.

Finance Minister Nirmala Sitharaman attributed the ₹2 lakh crore-plus GST revenues in April to “the strong momentum in the economy and efficient tax collections”, and asserted that there were no dues pending on account of IGST (Integrated GST) settlement to the States.

Revenues from domestic transactions grew 13.4%, the Finance Ministry said, while goods imports yielded an 8.3% uptick, helping GST inflows “breach the landmark milestone of ₹2 lakh crore”. This marks a rebound in revenues from goods imports that had contracted 5% in March, while domestic transactions’ growth weakened in April relative to the 17.6% uptick recorded in the previous month. Overall, gross GST revenues had grown at a slower pace of 11.5% in March, while net revenues had risen 18.4%, faster than April’s growth.

April’s GST revenues, for transactions undertaken in March, are typically the highest in a year as taxpayers square their books for the financial year and remit any pending dues to meet compliance deadlines. Following last month’s record spike, experts project revenues to moderate in coming months, with some growth expected over the ₹1.68 lakh crore monthly average GST collection witnessed in 2023-24.

Compensation cess

GST compensation cess collections also hit an all-time high of ₹13,260 crore last month, which included ₹1,008 crore collected on imported goods. The cess is levied on select goods such as automobiles and tobacco products, over and above the peak GST rate of 28%.

Initially introduced for five years to compensate States for revenue losses arising from the 2017 switch to the GST regime, the cess is now being used to repay loans taken during the pandemic to recompense States amid a lockdown-triggered collapse in revenues.

The Ministry emphasised that there had been a positive performance across components, pointing to Central Goods and Services Tax (CGST) revenues of ₹43,846 crore, State GST revenues of ₹53,538 crore and Integrated Goods and Services Tax (IGST) inflows of ₹99,623 crore. The IGST collections included ₹37,826 crore collected on imported goods.

“The Central government settled ₹50,307 crore to CGST and ₹41,600 crore to SGST from the IGST collected. This translates to a total revenue of ₹94,153 crore for CGST and ₹95,138 crore for SGST for April, 2024 after regular settlement,” the Ministry statement said.

State-wise collections

Four States, including the erstwhile State of Jammu and Kashmir, Arunachal Pradesh, and Sikkim, recorded a contraction in revenues last month. Eight States saw muted growth relative to the 13.4% overall growth in domestic revenues, with Jharkhand (3%), Uttarakhand (4%), and Tamil Nadu (6%) seeing the weakest growth. Kerala and Karnataka both registered a 9% increase in revenues, while Madhya Pradesh and Telangana collections grew 11% each.

Revenues in Gujarat, Maharashtra and West Bengal grew close to the national average at 13%. Mizoram reported the highest growth at 52%, followed by Assam (25%) and Delhi, Bihar and Goa, each of which clocked 23% growth. Haryana reported a 21% rise in revenues, while the growth was 20% for Tripura, 19% for Uttar Pradesh, and 17% for Odisha. Revenues in strife-affected Manipur also reported a 15% uptick.

“A significant reason for this growth could be linked to deadline for GST audits and corresponding notices issued during this year,” said Abhishek Jain, partner and national head for indirect tax at KPMG.

Zomato said it will be filing an appeal against the tax demand order before the appropriate authority. File (representational image)
| Photo Credit: Reuters

Online food delivery platform Zomato has received a tax demand and penalty order of ₹11.82 crore related to GST on export services provided to its subsidiaries located outside India from July 2017 to March 2021.

The order was passed by the Additional Commissioner, Central Goods and Services Tax, Gurugram, raising the GST demand of ₹5,90,94,889, with applicable interest (not quantified) and penalty of ₹5,90,94,889.

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“We believe that we have a strong case on merits, and the company will be filing an appeal against the order before the appropriate authority,” Zomato stated in a regulatory filing late evening on April 19.

It informed that the demand order has been received, “confirming demand of GST on export services provided by the company to its subsidiaries located outside India during the period July 2017 to March 2021 by upholding that such services do not fulfil the conditions for the supply to qualify as export of service under GST”.

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“The company, in its response to the show cause notice, had clarified on the allegations, along with supporting documents and judicial precedents, which appears not to have been appreciated by the authorities while passing the order,” it added.

Image used for representational purposes only.
| Photo Credit: Special Arrangement

India’s gross revenues from the Goods and Services Tax (GST) hit a three-month high to cross ₹1.65 lakh crore in July. However, at 10.8%, it was the slowest uptick in collections since July 2021 compared to revenues from the same month last year.

Revenues from domestic transactions and services imports grew 15% in July, which marked the fifth occasion that GST revenues have crossed the ₹1.6-lakh-crore mark during a month. Sequentially, July’s collections, for transactions undertaken in June, were 2.2% higher than the previous month’s GST kitty.

The Finance Ministry did not disclose the trend for GST collections on import of goods, but back-of-the-envelope calculations indicate that there was a 0.8% decline in July from a year ago. Integrated GST collections on goods imports dropped by 0.43% to ₹41,239 crore, while GST Compensation Cess levies on goods imports dropped 15.6% to ₹840 crore.

Overall GST Compensation Cess levies, which will continue till at least March 2026 to repay market borrowings made amid the pandemic to compensate States, grew 7.9% in July to touch nearly ₹11,780 crore.

Central GST or CGST collections in July stood at ₹29,773 crore, while State GST (SGST) yielded ₹37,623 crore. The total IGST collection came to ₹85,930 crore, with around 52% of that revenue coming from domestic transactions.

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“The government has settled ₹39,785 crore to CGST and ₹33,188 crore to SGST from IGST. The total revenue of the Centre and the States in the month of July 2023 after regular settlement is ₹69,558 crore for CGST and ₹70,811 crore for the SGST,” the Finance Ministry said.

While overall domestic revenues grew 15%, as many as 18 States recorded 15% or higher growth, while 11 States grew at a slower pace. 

Strife-torn Manipur was the only State to record a contraction, with a 7% drop in revenues. However, the north-eastern States of Mizoram (47%), Meghalaya (27%), Sikkim (26%), recorded the highest growth in revenues, followed by Delhi (25%), Uttar Pradesh (24%) and Tripura (23%).

At the other end of the spectrum, Nagaland, with a 3% rise in revenues, Chhattisgarh with 4%, and Andhra Pradesh (5%) saw the weakest growth, followed by Gujarat and Telangana, both of which clocked a 7% growth.

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“The past trend of six key States generating almost 60% of the nationwide GST collections continues in the current month as well,” noted MS Mani, partner at Deloitte India, adding that compliance drives from the Revenue department were yielding results with steady revenue trends.

The ₹1.6-lakh-crore monthly collection mark may be the new norm for GST revenues, said Abhishek Jain, partner and national head for indirect tax at KPMG, who said revenues might rise further with the upcoming festival season and the approaching “normal period of limitation” for 2017-18 assessments.

Mandatory e-invoicing for all firms with a turnover of ₹5 crore, which kicks in this month, is also expected to bolster revenues, though it may pose some transition challenges for smaller businesses.

“Smaller taxpayers may have trouble embracing the new compliance paradigm, but it would ultimately expedite operations, improve transparency, and encourage more transactions with larger businesses, despite the transition’s potential difficulties,” said Saloni Roy, partner at Deloitte India. 

The 15th Finance Commission has recommended that States be given 41% of the divisible tax pool of the Centre. File.
| Photo Credit: Reuters

The Centre has devolved over ₹3.09 lakh crore to States till July of the ₹10.21 lakh crore budgeted to be transferred in the current fiscal, Minister of State for Finance Pankaj Chaudhary said on July 25.

“Out of ₹10.21 lakh crore estimated to be transferred to States for the FY 2023-24, ₹3,09,521.22 crore has been devolved till July 2023, in 4 instalments having double the normal amount in June’23 for FY 2023-24. There is no pendency on part of devolution payable to States…,” Mr. Chaudhary said in the Lok Sabha.

Of the ₹3.09 lakh crore net proceeds of shareable union taxes and duties distributed to the States, Central GST collection devolution stood at ₹94,368 crore till July.

“Part of the CGST collected and credited to the Consolidated Fund of India is devolved to the States as per the accepted recommendations of the Finance Commission. The total amount of such CGST devolution released to states during FY 2022-23 was $2,68,334.19 crore; this was released in 14 instalments,” the minister said.

The 15th Finance Commission has recommended that States be given 41% of the divisible tax pool of the Centre during the period 2021-22 to 2025-26, which is at the same level as was recommended by the 14th Finance Commission.

In reply to a separate question, Chaudhary said Goods and Services Tax (GST) has decreased the number of taxes and overall tax burden while significantly increasing transparency.

“It has resulted in the significant increase in the number of registered taxpayers. Before the GST regime, the number of registered taxpayers was around 54 lakhs, which has now increased to around 1.46 crore after the GST regime,” he said.