GST Revenue Collection

Soon after introducing GST (Goods and service tax) in 2017, the major revenue collections observed a considerable hike, and the main reason behind it is that the centralization of all taxes made tax evasion difficult and bring in transparency to the Indian taxation system. Before the launch of GST, many taxes with different rates use to apply to different goods and services. Also, it has been observed that many sellers used to charge hidden taxes on certain goods and services. Thus GST proved to be a game-changing initiative by the central government resolving all the discrepancy in the taxation system. 

GST Revenue Collection

The GST revenue collection for the month of May 2022 was around INR 1,02,485 Crores, which observed an overall increase of 40% from May 2021, when the GST revenue collection was INR 70,951 Crores.

What do you mean by the GST Revenue Collection?

The Government of India as well as any other economy collects revenue from different sources out of which the taxes account for more than 50% of total revenue collection. In India, the government charges taxes on different goods and services at different rates for example 5% on edible items, 12% on processed food items, 18% on household accessories and manufactured items, and 28% on luxury items, and tobacco. Thus the GOI collects a significant amount from the consumers on every product in the form of GST and thus the collected amount is called the GST revenue collection. 

More than 80% of the Government’s GST revenue collection comes from public listed companies.

Significance of GST Revenue Collection:

The GST revenue collection has a great significance, as the amount collected from the GST is being further used by the government for the development of the nation. In India, the government doesn’t have many sources to generate revenue. As only 6.25% of the Indian population does pay income tax, thus the collection of taxes through GST becomes quite important. Also, many economists believe that as the government’s tax revenue increases the economic growth of that nation also increases. 

However, an increase in GST revenue collection can’t be always seen as an indicator of economic growth. As the government’s GST revenue collection increases its burden gets quite heavy on the pocket of the common man. However, the increase in tax collection also leads to development which indirectly benefits the taxpayers. Thus it’s quite important for the government to maintain the growth in the GST revenue collection.

How does the Government collect GST?

A certain percentage of tax is levied by the Government of India on the supply of any goods and services and this tax is known as the GST (Goods and Services Tax). This tax is being levied by the government from the beginning to the end of the supply chain i.e. from the manufacturer to the consumer. Also, the GST is being levied by the both central and the state governments of India. The tax charged by the central government is called CGST, (Central Goods and Services Tax), while the tax levied by the state government is known as SGST (State Goods and Services Tax). For example, if 18% of GST is being collected on the supply of any goods or services then the 9% is CGST while the other 9% is SGST. In this way, both the central and the state governments of India collect revenue via GST.

Impact of the GST revenue collection on the Indian Economy

The GST revenue collection has a deep impact on the Indian economy as the tax collected via GST is the main driver of the Indian economy. 

• As the revenue collection of the government increases, the government starts spending more money on development works and launching new public welfare policies, that benefit both the netizens as well as the economy. 
• The GST is a single taxation system that retards tax evasion and thus increases the government’s revenue. 
• As the government doesn’t charge dozens of different taxes on the supply or purchase of any goods and services, it makes it easier for foreign investors to invest in such economies. 
• The GST brings transparency to the taxation system thus promoting ease of doing business, which leads to an increase in the gross domestic product (GDP) of India.