Monthly goods and services tax (GST) collections hit an all-time high of Rs 1.68 trillion in April (March transactions), indicating efficient plugging of tax evasion, a sustained shift of business to the formal sector of the economy and year-end bunching of tax payments by firms.

Continued buoyancy in GST collections for several months in a row would help allay the state governments’ concerns about a revenue shock they might have to deal with once a five-year revenue protection ends on June 30. For the Centre, the high mop-up would mean its share of the tax as Central GST would be higher than the budget estimate (BE) of Rs 6.6 trillion for FY22.

“Even though the spike in the GST collections in April 2022 partly benefits from year-end adjustments, the all-time-high magnitude of inflows is very enthusing, and augurs well for a robust year-on-year growth in the months ahead as well. This is also evidence of a healthy pace of economic activity in March 2022 in spite of the escalating geopolitical conflict,” said Aditi Nayar, chief economist at Icra.

A senior official recently told FE that gross GST revenues in FY23 may be Rs 1.3-1.35 trillion a month on average (about Rs 16 trillion in the year), which could mean the Centre’s FY23 GST revenues could be Rs 300-550 billion more than the Budget Estimate, after adjusting for cess collections.

The average monthly GST mop-up was Rs 1.23 trillion in FY22. The Budget FY23 has factored in average GST collections of Rs 1.2 trillion a month.

With as many as twenty states and UTs registering over 14% growth in GST collections in their domain in April, most of the states could be close to achieving a revenue growth of 14%, the guaranteed level under the compensation mechanism, which will end on June 30. Maharashtra has created a new benchmark by collecting Rs 274.95 billion in April 2022, the highest ever by a state, which was 25% more than Rs 220.13 billion collected in April 2021.

“During April, 2022, revenues from import of goods were 30% higher and the revenues from domestic transaction (including import of services) are 17% higher than the revenues from these sources during the same month last year,” the finance ministry said in a statement.

Total number of e-way bills generated for inter-state commerce in March 2022 was 77 million, 13% higher than in February 2022, which reflected recovery of business activity at faster pace, it said.

April saw the highest ever tax collection in a single day on the 20th of the month and the highest mop-up was during 4-5 PM on the day. The highest single day payment last year (on the same date) was Rs 480 billion. “This shows clear improvement in the compliance behaviour, which has been a result of various measures taken by the tax administration to nudge taxpayers to file returns timely, to making compliance easier and smoother and strict enforcement action taken against errant taxpayers identified based on data analytics and artificial intelligence,” the ministry said.

The total revenue of Centre and the states in April 2022 after regular settlement is Rs 665.82 billion for CGST and Rs 687.55 billion for the SGST.

“While the GST collections in respect of March have always been high, the record collections of Rs 1.68 trillion reported are on account of multiple favorable factors including the recent changes on permitting input tax credits only upon timely compliance by the vendors,” said MS Mani, Partner, Deloitte India.