GST Revenue Surges 9% in October, Reflecting Strong Domestic Demand and Compliance

The Goods and Services Tax (GST) revenue for October has soared to over ₹1.87 lakh crore, marking an impressive 8.9% increase compared to the same month last year. This surge reflects strong domestic demand and improved compliance measures, providing a robust start to the second half of FY25.

October’s collection of ₹1,87,346 crore stands as the second-highest monthly GST revenue recorded since the implementation of the new tax regime in July 2017, surpassing the previous second-highest monthly figure of ₹1,87,035 crore achieved in April 2023. The all-time highest collection was registered in April 2024, at ₹2.10 lakh crore.

Despite global economic challenges, some states like Tamil Nadu, Telangana, Uttar Pradesh, Jharkhand, and Karnataka experienced only modest growth, while Chhattisgarh reported a 1% year-on-year contraction, bringing in ₹2,656 crore. However, the overall GST revenue showcased resilience, especially in light of a net revenue growth of 7.9% to ₹1,68,041 crore, even after accounting for ₹19,306 crore in refunds.

According to government data released on Friday, the increase in GST revenue indicates the robustness of domestic demand. Notably, domestic refunds have seen a remarkable rise, jumping 42.8% from ₹7,352 crore in October 2023 to ₹10,498 crore this year.

Experts have noted that while domestic supply revenues grew at a commendable 10.6% year-on-year, revenue growth from imports has slowed to less than 4%, highlighting the adverse effects of global economic pressures. Deloitte India partner MS Mani pointed out that the current revenue growth from domestic suppliers closely matches the cumulative domestic demand from April to October 2024, underscoring the uniform strength of demand throughout the year.

KPMG’s indirect tax head, Abhishek Jain, emphasized the significance of collections nearing ₹1.9 lakh crore, which reflects the strength of the Indian economy. However, some experts, including Saurabh Agarwal from EY, cautioned about a potential slowdown in consumer spending in the short term, despite the overall positive outlook.

The festive season is expected to boost GST collections further, particularly through strong performance in the automobile sector. However, experts remain vigilant, noting that while recent collections are promising, the longer-term prospects for GST collections remain bright, driven by India’s expanding consumer base and supportive government policies.

The efficiency of the GST administration has also been praised, particularly in relation to timely refunds that aid small businesses by unblocking their working capital. The increase in refund processing efficiency signals improvements in the overall GST framework, which may contribute to sustained revenue growth in the future.

Sources By Agencies

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