In July, the central and state governments collected $22.3 billion in Goods and Services Tax (GST), reflecting a 10.3% year-on-year increase, according to data from the finance ministry. This amount also represents a rise from the $21.2 billion collected in June 2024.
Although July’s GST collections were below the record $25.4 billion achieved in April, experts view the figures as consistent with strong revenue trends and anticipate further increases as the festive season approaches. The July figures represent sales from June 2024, which is typically slower before the festive period begins.
Abhishek Jain, indirect tax head and partner at KPMG India, commented that a 10% growth in GST collections compared to last year aligns with expectations and indicates the GST system’s stability and maturity in India. With upcoming festivities, further growth in collections is anticipated.
On a net basis, including refunds of $1.97 billion, GST collections increased by 14.4% for the month, despite refunds being 19.4% lower compared to the previous year. Major GST contributors by value included Maharashtra, Uttar Pradesh, Karnataka, and Tamil Nadu.
M.S. Mani, partner at Deloitte India, noted a significant variation in collection growth across states. Maharashtra, Gujarat, and Karnataka saw an increase of 11-13%, while Tamil Nadu, Andhra Pradesh, and Uttar Pradesh experienced growth ranging from -7% to 5%. This variation requires further analysis based on sectoral data for these states.
Notably, the highest growth was observed in Nagaland, Manipur, Andaman and Nicobar Islands, and Ladakh, albeit from a low base. Saurabh Agarwal, tax partner at EY, attributed this increase to heightened economic activity and consumption in these developing regions. He also mentioned that a potential stagnation or decline in collections might occur in August due to the monsoon season’s impact on economic momentum.
For the period from April to July 2024, gross GST collections totaled $89.1 billion, marking a 10.2% increase from $81.4 billion during the same period last year.
India’s manufacturing sector remained stable in July, supported by new orders driving higher output. The HSBC final India Manufacturing Purchasing Managers Index (PMI), compiled by S&P Global, recorded a value of 58.1 in July, slightly down from 58.3 in June but up from 57.5 in May and 58.8 in April.
Since its introduction in FY18, GST collections have consistently risen annually, with more businesses complying with the indirect tax regime and joining the formal sector. Gross GST collections have nearly tripled from $96.4 billion in FY18 to $244.5 billion in FY24.
The finance ministry projects central GST revenue, including cess, to reach $128.3 billion for FY25, an increase over the revised estimate of $118.4 billion for FY24 presented in the budget.
