Why GST Collection Is Surging? – Free PDF Download


What has happened?

  • The gross Goods and Services Tax (GST) collections have risen 28% year-on-year to Rs 1,48,995 crore for July (for sales in June),
  • The second highest level since the July 2017 rollout of the indirect tax regime, data released by the Finance Ministry Monday showed.
  • Before this, GST collections had recorded the highest-ever level of Rs 1.68 lakh crore in April 2022 for year-end sales in March.

  • This is the sixth time that monthly GST collections have crossed Rs 1.40 lakh crore mark since inception of GST and fifth month in a row since March 2022.
  • The average monthly gross GST collection for the first four months of the financial year 2022-23 has been Rs 1.50 lakh crore against the average monthly collection of Rs 1.12 lakh crore in the same period last fiscal.
  • Except Daman & Diu, Bihar, Tripura, which recorded a contraction, all other states/UTs recorded a growth in GST generated in their respective regions,
  • With Maharashtra, Karnataka, Gujarat, Tamil Nadu, and Uttarakhand leading among states.

What govt says on higher revenue?

  • The Finance Ministry said in a statement Monday that the 28% increase in GST revenue displays a “very high buoyancy”.
  • “This is a clear impact of various measures taken by the Council in the past to ensure better compliance.
  • Better reporting coupled with economic recovery has been having a positive impact on the GST revenues on a consistent basis,” it said.
  • Last month, Union Finance Minister Nirmala Sitharaman had said that Rs 1.40 lakh crore is now the “rough bottom line” for monthly GST revenue collections.
  • “…the trend that was being talked about, we are now reversing that and showing that the GST revenues remain above Rs 1.40 lakh crore.
  • So, Rs 1.40 lakh crore is the rough bottom line, we are not going below that. We will remain above that,” she had said.


  • Experts say that action against tax evaders, including steps being taken by state authorities, have resulted in better compliance and helped push the growth in GST collections,
  • Along with economic recovery and higher inflation rate.
  • It will help boost the government’s GST collections beyond the budgeted figures.

End of GST compensation

  • After the end of the compensation regime for states in June 2022, the higher GST revenue growth is expected to ease the revenue concerns for some states going ahead.
  • However, states with a heavy dependence on compensation may find FY 2023 to be a challenging year, with some even resorting to higher enforcement actions to shore up revenue.
  • Under GST, as per the Goods and Services Tax (Compensation to States) Act, 2017,
  • The states were guaranteed compensation at the compounded
  • rate of 14% from the base year 2015-16 for losses arising due to implementation of the taxation regime for five years since its rollout.
  • This came to an end on June 30. The GST Council meeting held in June did not take any decision to extend the compensation mechanism despite at least a dozen states making a demand for the same.

Targets being set

  • More enforcement related measures are being taken by the authorities in the wake of the end of the compensation regime.
  • Vivek Jalan, Partner, Tax Connect Advisory, said, “It is understood that revenue targets have been set for the state officers also which they would now try to achieve.
  • Again, it is important to note that even if a dealer is registered with the Centre, the state can still investigate it on a specific issue and vice-versa.”
  • Abhishek Jain, Partner, Indirect Tax, KPMG in India, said, “These consistent high collections indicate recovery from the pandemic and can also be attributed to inflation and tight checks and balances implemented by the government.
  • Further, with rationalisations being implemented subsequent to the recent GST Council meet, these numbers may further go up in the coming months.”

Q) Which among the following correctly categorizes Collateralized Borrowing and Lending Obligation?

  1. A market operation
  2. A money market instrument
  3. A clearing system
  4. A Scheme of Reserve Bank of India




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