Goods and Tax Services (GST) collections by the centre and states in February crossed the ₹1 trillion mark for the fifth consecutive month aided by a strong drive to improve compliance and recovery in economic activities.
GST collections staging a recovery after a steep drop in April last year when the country was in a national lockdown offers relief to policymakers, hoping to bridge the revenue shortfall.
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Data released by the finance ministry showed GST collections stood at 1.13 trillion in February after record collections of 1.2 trillion in January. After settlement of revenue from inter-state transactions, the central government received ₹67,490 crore and states together received ₹68,807 crore during the month. February receipts refer to sales made in January.
“The GST revenues crossed ₹ 1 lakh fifth time in a row and crossed ₹ 1.1 lakh crore third time in a row post pandemic despite this being revenue collection of the month of February. This is a clear indication of the economic recovery and the impact of various measures taken by tax administration to improve compliance," the finance ministry statement said.
Stringent measures against fake-invoicing, data analytics using information from various agencies handling GST, income-tax and customs and effective tax administration have contributed to the steady increase in GST collections in recent months. The nationwide drive against fake GST invoice frauds helped in record GST collections in last three months with Rs. 1.15 trillion in December, 2020 and Rs. 1.20 trillion in January.
Indian economy recovered in the December quarter to expand at 0.4% after two successive quarters of historic contraction induced by the coronavirus pandemic, signaling that Asia’s third largest economy may be on a path of slow but sustained recovery. For FY21, however, government’s statistics office now estimates deeper contraction of 8% than earlier estimate of 7.7% contraction.
Aditi Nayar, principal economist at ICRA Ltd said while the growth of GST collections eased mildly in February, it remained healthy, in line with the consolidation in the momentum of economic activity observed across a variety of lead indicators. “Subsequently, a favourable base effect is likely to result in the CGST collections expanding by 18-23% in March,’ she added.
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