Enhanced compliance enabled the Centre and States to collect ₹1.75 lakh crore in Goods & Services Tax (GST) revenue in August. This brings the average monthly collection for the current fiscal year to ₹1.82 lakh crore.

The August collection reflects goods consumed and services availed in July.

Though it shows a growth of 10 per cent over August last year, but on a sequential basis, it is around 4 per cent lower.

Another key point is that collection growth has remained in single digits in states like Gujarat, Andhra Pradesh, and Tamil Nadu.

Despite this, experts believe that collections will receive a boost with the upcoming festival season. Additionally, a special drive to curb the use of fake Input Tax Credit (ITC) is expected to further improve collections.

The data from GST portal showed growth in collection through import (12.1 per cent) was higher than domestic sources (9.2 per cent). At the same time, the refund was higher for both domestic and export sources, all of which affected net collection which saw a growth of 6.5 per cent and rose to ₹1.5 lakh crore. The net collection recorded a growth of over 14 per cent in July.

The Centre and States will come together to conduct the second all-India drive, between August 16 and October 15, to detect suspicious or fake GSTINs.

This initiative aims to carry out necessary verifications and take corrective actions to remove these fraudulent billers from the GST system, thereby protecting government revenue.

Commenting on the overall collection, M S Mani, Partner with Deloitte India said, a 10 per cent increase in collections on a YTM basis at the start of the festive season for the year indicates that consumption is robust and will only improve further in the coming festival months.

“This would give renewed confidence that the collection targets for the year would be achieved,” he said.

Furthermore, he said, the increase in collections for the month also attributes to the increased focus on GST investigations and audits, which typically increase compliance and resultant collections.

The ability of Maharashtra, Karnataka, UP, MP and Haryana to record double digit increases in collections once again indicates the robust consumption in these large States, accompanied by the tax authorities measures to improve compliance and crack down on evasion.

However, there are some differences in the GST collection increases across major States which may need a deeper dive. “The single digit increase in large states like Gujarat, AP and Tamil Nadu would engage the attention of the tax authorities in these states,” he said.

According to Saurabh Agarwal, Tax Partner with EY, despite a decline in net GST revenue due to increased refunds, the continued growth in gross GST collections indicate a robust economy. The shift towards self-reliance is evident in the decreased imports and increased exports. “The government’s commitment to reduce working capital costs for businesses facing inverted duty structure is demonstrated by the higher domestic GST refunds. By rationalising rates, the government aims to address this issue over time,” he said while adding that the positive growth in GST collections in Nagaland, Assam, Andaman & Nicobar, and Ladakh indicates holistic economic development across India.

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