Strong GST Collections Defy Fears of Revenue Decline in India

The latest report from the State Bank of India (SBI) indicates that **Goods and Services Tax (GST)** collections in India are experiencing significant growth, countering concerns about potential revenue declines. For October 25, 2023, gross GST collections rose by **4.6 percent**, totaling **Rs 1.96 lakh crore**. This positive trend challenges previous fears regarding a downturn in GST revenue following recent rationalisations.

According to the SBI report, the overall domestic GST collection increased by **2 percent** year-on-year, while gross import revenue surged by **12.8 percent** in October. Additionally, the number of e-way bills generated in September reached an all-time high of **Rs 13.2 crore**, indicating robust business activity. The report highlights that total refunds for October amounted to **Rs 26,934 crore**, marking a substantial **39.6 percent** increase compared to the same period last year.

Future Projections for GST Revenue

Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor at SBI, stated that if states continue to experience similar gains and losses post-rationalisation as observed in October, the projections for GST revenue in **Fiscal Year 2026** suggest that most states will remain net gainers. This assertion contradicts the **Union Government’s** estimate of a potential revenue loss of **Rs 48,000 crore** due to GST rate adjustments.

Many research agencies had previously speculated that rationalisation could lead to staggering losses of up to **Rs 10 lakh crore**. However, historical data from past GST rate changes, particularly in **July 2018** and **October 2019**, indicates that such adjustments do not necessarily weaken revenue collections. Instead, these changes appear to trigger a temporary adjustment period followed by stronger revenue inflows.

Dr. Ghosh emphasised the importance of this steady growth in GST collections, noting that it reflects an improvement in business conditions and consumer activity across the nation. The data suggests that fears surrounding revenue declines may be unwarranted and that states can expect continued growth in their GST revenues.

As India navigates its economic landscape, the resilience shown by GST collections could bolster confidence among policymakers and investors alike. The trends observed in the recent months may serve as a positive indicator for the country’s financial health as it heads into the new fiscal year.

In summary, the latest findings from SBI underscore the strength of India’s GST framework, highlighting a potential for revenue growth that defies prior concerns about substantial declines.