What Will Be the Impact of the Upcoming GST Rate Changes on Collections?
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Synopsis
As GST collections rise, experts are keen to see the effects of upcoming rate changes. With substantial growth in major states and a meeting of the GST Council on the horizon, understanding these dynamics will be crucial for predicting future revenue trends.
Key Takeaways
- GST collections increased by 6.5 percent in August.
- Collections have remained above Rs 1.8 lakh crore for eight months.
- GST Council meeting on September 3-4 to discuss rate changes.
- Major states report a 10 percent growth in collections.
- Refunds have decreased by 20 percent year-on-year.
New Delhi, Sep 1 (NationPress) With GST collections showing a 6.5 percent increase in August, experts commented that the real focus will now be on how these collections will evolve in the upcoming months, especially considering the expected rate adjustments and the slowdown in certain revenue streams, particularly from online real-money gaming.
GST collections have consistently surpassed the Rs 1.8 lakh crore threshold for the eighth consecutive month, highlighting the rise in economic activity across the country.
According to Abhishek Jain, Partner and Head of Indirect Tax at KPMG in India, "Overall, collections have remained consistent with previous months, although we have observed a slight reduction in refund disbursements."
The gross domestic revenue increased by 9.6 percent to Rs 1.37 lakh crore, while tax revenue from imports decreased by 1.2 percent to Rs 49,354 crore in August. Year-on-year, GST refunds saw a 20 percent drop totaling Rs 19,359 crore.
As stated by Karthik Mani, Partner of Indirect Tax at BDO India, the increase in domestic GST collections is attributed to substantial growth in major states such as Maharashtra, Karnataka, and Haryana, all of which reported a 10 percent growth in revenue.
"However, on a month-to-month comparison, gross GST collections have experienced a 4.8 percent decrease, which will be crucial for the GST Council to evaluate potential revenue losses as it discusses GST rate adjustments later this week," he remarked.
The GST Council is scheduled to convene on September 3-4 to deliberate on the restructuring of the tax rate into a two-slab model (5 and 12 percent).
This Council, which includes representatives from both the Centre and state governments, will consider implementing a two-slab GST rate of 5 and 18 percent on most goods. A separate, higher 40 percent tax will be applied to sin goods like cigarettes, tobacco, and sugary beverages as part of this rationalization effort.
The robust tax collections witnessed in recent months have significantly bolstered the nation’s fiscal stability and macroeconomic health, supporting sustained growth.
Point of View
I believe it is essential to maintain an unbiased perspective on the evolving GST landscape. The upcoming adjustments may significantly impact revenue streams, making it crucial for stakeholders to stay informed and engaged.
NationPress
01/09/2025
Frequently Asked Questions
What is the current trend in GST collections?
GST collections have shown a steady rise, with a 6.5 percent increase in August, remaining above Rs 1.8 lakh crore for eight months.
How will the anticipated GST rate changes affect collections?
Experts suggest that the upcoming rate adjustments could significantly influence collections, especially with certain revenue streams stalling.
What are the details of the GST Council meeting?
The GST Council will meet on September 3-4 to discuss the introduction of a two-slab tax structure.
Which states are contributing to the growth in GST collections?
Major states like Maharashtra, Karnataka, and Haryana are showing significant growth in GST collections.
What impact do refunds have on GST collections?
There has been a 20 percent decrease in GST refunds compared to last year, which affects overall collections.
