Hyderabad: India's common goods and services tax, popularly known as GST, which turned the country into a single common market for most of the indirect taxes and duties such as service tax, sales tax and excise duty, crossed an important milestone last month this year as the GST collections hit an all-time record of Rs 2.1 lakh crore in April, highest ever in its nearly seven-year-long journey.
After independence, India was a single market as far as direct taxes such as personal income tax and corporate tax are concerned. However, indirect taxes and duties such as service tax, sales tax or value added tax (VAT) and excise duty, which was levied by the Centre on production of goods, were administered by different states and the union government separately, which made it difficult for businesses to comply with the country’s several tax laws as different states levied and administered several taxes in their own ways and at differential rates.
In order to overcome this multitude of taxes and duties, after a long and complex negotiation, both states and Union agreed to jointly implement and administer a nationwide common goods and services tax by amending the country’s Constitution. As a result, the new GST laws were implemented from July 1, 2017. This nationwide common GST subsumed most of the indirect taxes and duties, leaving out petroleum products and alcohol products out of its ambit.
It simplified the administration of most of the indirect taxes and most of them have been subsumed in one common tax. However, like any other tax reform, the GST also faced severe adjustment and adaptation problems and required constant changes over the years. It led the opposition parties to blame the government for implementing a faulty GST model in a hasty manner.
Initially, the GST collection was muted as the average monthly GST collection has been estimated for Rs 90,000 crore in FY 2017-18, which has increased to Rs 1.68 lakh crore in the last financial year (FY 2023-24), which is nearly double the average monthly collection during FY 2017-18. In the last financial year, gross GST collection crossed an all-time high of Rs 20.18 lakh crore, an increase of 11.7 per cent over the previous year.
In contrast to this, the annual GST collection during the FY 2022-23 was 18.01 lakh crore which translates to an average monthly GST collection of Rs 1.5 lakh crore. GST also closed the financial year with a strong performance as in March 2024, it had recorded the second highest collection till then at Rs 1.78 lakh crore.
It has started the current financial year with even more strong performance as for the first time it crossed the milestone of over Rs 2 lakh crore in a month in its nearly seven-year-long journey. This strong performance was based on increased domestic transactions, which recorded a growth of 13.4 per cent and GST collected on imports as it went up by 8.3 per cent.
