India’s Goods and Services Tax (GST) collections for September 2024 jumped to Rs 1.73 lakh crore, reflecting a 6.5per cent rise from Rs 1.63 lakh crore collected in the same month last year, according to official data released by the Finance Ministry. This consistent growth in GST revenue highlights the steady improvement in the country’s tax base and economic activity, driven by both domestic consumption and robust imports.
After accounting for refunds, the government’s net GST collection for September stood at Rs 1.53 lakh crore, which reflected a 4 per cent year-on-year growth. Refunds disbursed during the month amounted to Rs 20,458 crore, which is a significant 31 per cent increase compared to previous year, showcasing the government’s focus on easing tax compliance and timely processing of refunds.
The boost in revenue is largely attributed to the 5.9 per cent increase in domestic collections, which reached Rs 1.27 lakh crore. This growth signifies an uptick in domestic consumption and business activities. Additionally, revenue from the import of goods grew by 8 per cent, totaling Rs 45,390 crore, underscoring the continued demand for imported goods amidst a stable economic environment.
The steady rise in both domestic and import-based GST collections points to the strength of India’s consumption-driven economy. It reflects the revival in demand across sectors, including retail, manufacturing, and services, as businesses regain momentum post-pandemic.
In its meeting on September 9, 2024, the GST Council, chaired by Finance Minister Nirmala Sitharaman, took several key decisions aimed at making the tax system more equitable and reducing the burden on consumers in specific sectors. The Council formed a Group of Ministers (GoM), led by Bihar Deputy Chief Minister Samrat Choudhary, to explore the possibility of lowering GST rates on life and health insurance products. This is expected to make essential insurance policies more affordable for the masses, which could, in turn, lead to higher penetration of insurance products in the country. The GoM is expected to present its recommendations by the end of October.
The Council also reduced GST rates on cancer medicines from 12% to 5% and on namkeens from 18% to 12%. The Council also discussed long-term GST-related matters, such as the compensation cess beyond March 2026. A separate GoM was set up to address these concerns. Additionally, a committee of secretaries will be formed to address the negative balance in Integrated GST (IGST), with a focus on recovering funds from the states.
With the GST Council taking steps to ease tax burdens in sectors like healthcare and insurance, the positive effects of higher GST collections are likely to be felt across various layers of society. The increased revenue, coupled with targeted reforms, will strengthen the government’s ability to fund public projects, enhance welfare measures, and foster overall economic growth in the long run.
