High GST collection shows the strength of the Indian economy

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Around 18 lakh crore was collected overall in 2022–2023, an increase of 22% from the previous year. Data on the Goods and Services (GST) tax collection for the month of March was released by the government on Friday. This data conveys two key messages: first, the new indirect tax system, which went into effect on July 1, 2017, has undoubtedly matured; and second, the Indian economy’s resiliency is demonstrated by the sustained growth of the consumption tax for a full year despite global headwinds.Achieving the 1 lakh crore milestone each month didn’t seem audacious for very long. The largest monthly collection was 95,600 odd crore in 2017–18, the year when the GST was introduced. Only four times will the monthly collection of 1 lakh crore in 2018–19 be over that threshold. In the next fiscal year, seven times (2019-20). The Indian economy was thereafter decimated by the Covid-19 pandemic, which resulted in April 2020’s lowest receipts ever of 32,172 crore.

Prime Minister Narendra Modi’s emergency measures, including free vaccinations for all residents, direct cash transfers to the most vulnerable, and free food and fuel for the needy, were implemented in 2020–2021. Nirmala Sitharaman, the finance minister, gave the economy a measured boost in response to the urgent need. Instead of handouts, she concentrated on useful loan facilities without collateral, giving businesses, especially micro, small, and medium enterprises, a lifeline (MSMEs). When GST collections in October 2020 returned to the psychological level of $1 lakh crore, the outcome was immediate and obvious. Not only was the level attained again, but it was also maintained for six consecutive months, ending on March 31, 2021, when the fiscal year ended.The next fiscal year (2021–2022) saw a swift recovery in business activity, as seen by higher monthly GST receipts. With the exception of May and June 2021, GST income was strong every month, reaching a record-breaking $1.42 lakh crore in March 2022. The FY23 was unusually strong, with the greatest monthly revenue ever (1.67 lakh crore) in April 2022 and the second-highest monthly revenue ever (1.60 lakh crore) in March 2023.

The most recent official announcement, which was released on Saturday, stated that the overall gross collection for 2022–23 was over 18 lakh crore, an increase of 22% from the previous year, and that the average gross monthly collection for the entire year was 1.51 lakh crore. Also, the quarterly research revealed healthy company activity. As comparison to the average monthly collections of 1.51 lakh crore in the first quarter, 1.46 lakh crore in the second quarter, and 1.49 lakh crore in the third quarter of the fiscal year 2022–23, the average monthly gross GST collection for the fourth quarter increased to 1.55 lakh crore.

Since its commencement on July 1, 2017, the GST collection has steadily increased, demonstrating the maturity of the new indirect tax system. This is a response to critics who claim that it will take time to implement such a significant reform, which united the whole domestic market. Despite harsh criticism from the Opposition regarding the GST’s hurried implementation, the Modi administration interacted with stakeholders and collaborated with them to make it happen. The government’s perseverance paid out in the end.

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