GST collections across states uneven, 8 states boost mop-up: Study
Even as the overall mop-up from the goods and services tax (GST) have been buoyant at over Rs 1.6 lakh crore in most months this fiscal, a new study has revealed that several states are lagging behind in terms of collections, in an indication of uneven consumption demand in the country.
“There is reason to believe that growth in consumption across states has not been uniform across regions this year. This may explain why overall consumption in the country has not been growing at a higher pace despite signs of pent up demand being spoken of by several sectors,” said the report.
Large states like Gujarat and West Bengal have yet to pick up pace and any improvement can, hence, add to the overall consumption as well as tax collections, it further said. Meanwhile, Odisha, Rajasthan and Chhattisgarh have registered growth of less than 11% during this period and could have pushed back on the rural side with agriculture not performing as well as was expected.
“As consumption evens out in these states, there is reason to be optimistic of even higher collections in the coming months,” said the report.
The report has analysed GST collections for the nine months of the fiscal from April to December 2023. While overall GST collections grew by 11.7% in the period to Rs 14.97 lakh crore as compared to a year ago, final consumption grew by 8.7% in the first half of the year. Meanwhile, state GST collections grew by 15.2% to Rs 3.46 lakh crore between April and December 2023.
GST is a consumption based tax and broadly reflects the growth in consumption in the economy
The study revealed that eight states have driven the overall collections with growth higher than the national average. Maharashtra (18.2%), Karnataka (18.1%), Tamil Nadu (16.9%), UP (17.3%), Haryana (17.6%), Telangana (16.9%), Madhya Pradesh (18.8%) and Uttarakhand (15.2%) are the states to register more than 15.2% growth this year.
Gujarat (9.5%), West Bengal (9.8%), Delhi (13.3%) and Odisha (10.7%) are among the top 10 largest contributors where growth was slower with the former two growing by less than 10%. “This is indicative of consumption being uneven across geographies,” it said.
Other states like Kerala (14.7%), Punjab (12.4%), Jharkhand (12.3%), Bihar (11.5%) and Chhattisgarh (10.6%) also clocked in SGST revenue growth which was lower than the national average.
Significantly, the relatively smaller states and UTs have done very well in terms of growth but they just have a share of 3.2% in total collections.