The Delhi government registered an incremental rise in GST collection in the first quarter of FY23. The state’s GST revenue stood at Rs 4,349 crore in August, up 21% year-on-year, showing growth in trade and business in the city and consumer demand despite inflation. In the corresponding month last year, the GST collection was Rs 3,605 crore. The increase suggests that business activity and consumption remained strong in the National Capital despite high inflation. Delhi’s GST collection has been rising consistently for the last couple of months. In May 2022, the collection was recorded at Rs 4,113 crore, it grew to Rs 4,313 crore in June, and further to Rs 4,327 crore in the month of July.
This comes at a time when the country registered a record GST collection of Rs 1.43 lakh crore in August, suggesting that collections were robust across several states. The Finance Ministry said till August 2022, GST revenue has jumped 33%, displaying a very high buoyancy. According to the FinMin statement, the rise in GST collections consistently for six consecutive months is a clear impact of various measures taken by the GST 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.
August is the sixth month in a row that GST collection has been higher across the country, indicating an increase in consumption. The robust GST collections for 6 months straight are one of the key indicators that there has been a very low impact of inflation on the Indian economy, according to economists. With GST collection registering an incremental increase, the Delhi government has been hopeful of meeting its revenue targets in 2022-23 after two years where the revenues were negatively impacted by the pandemic. Note that the covid-induced lockdown had hurt Delhi’s economy in 2020-21 and the government’s tax collections had registered a negative growth of 19.53% compared to that in 2019-20.
Earlier this month, Punjab posted a growth of 23% in the goods and services tax revenue in the first five months of the current fiscal. Punjab registered a 17% growth in GST revenue in August and stayed ahead of some of the larger states such as Uttar Pradesh, Madhya Pradesh, Gujarat, and Rajasthan. State finance minister Harpal Singh Cheema had said that the measures taken by the Bhagwant singh Mann govt have proved to be effective in plugging leakages. The increase in revenue has been clearly reflected in the results, he added.
Despite the handsome GST collection, states’ revenue growth will slide to 7-9%, a Crisil report said last month. The revenue growth had galloped 25 per cent in FY22 courtesy a lower base in the pandemic-affected FY21, the report by rating agency, which analysed 17 states accounting for 90 per cent of the aggregate GSDP, said. In FY23, healthy tax buoyancy will support the revenue growth, with Goods and Services Tax (GST) collections and devolutions from the central government, which together comprise up to 45% of the states’ revenue, expected to show robust double-digit growth, it said.