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Sunday, May 19, 2024, 5:31 am

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Economy performing well, with record GST collections.

Economy performing well
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There is more excellent economic news. The Goods and Services collection in April, the first month of the 2024-25 fiscal year, surpassed the psychologically important milestone of Rs 2 lakh crore, indicating the economy’s overall health. The Union Ministry of Finance reported an April collecting total of Rs 2.10 lakh crore. This represented a 12.4% increase from the same month last year. Domestic transactions increased by 13.4% and imports grew by 8.3%. The ministry reported a 17.1% increase in net revenue after refunds to Rs 1.92 crore from the same month last year. In 2023-24, GST collection totaled Rs 20.18 lakh, up 11.7% from the previous year. Last year’s average monthly collection was Rs 1.68 crore, compared to 1.5 crore in 2022-23. Maharashtra collected the most (Rs 37,671 crore), followed by Karnataka with Rs 15,978 crore and Gujarat with Rs 13,301 crore in April.

For the first time, Uttar Pradesh contributed Rs 12,290 crore to the GST collection, surpassing Tamil Nadu’s Rs 12,210 crore and Haryana’s Rs 12,168 crore, respectively. Since its launch on July 1, 2017, GST collection has averaged around Rs one lakh per month. These have steadily increased over time, reaching Rs 2 lakh crore last month. Despite initial concerns and online difficulties, the GST system has performed successfully in recent months. Users reported few concerns, and the service provider worked to improve the customer experience.  The single nation-wide tax which subsumed a variety of central and State indirect taxes on goods and services, barring principally those on liquor and petroleum products, has certainly resulted to easier revenue collections and a greater ease of doing business than was the situation in the pre-GST years. While avoiding the cascading effect of indirect taxation, the GST has significantly reduced tax evasion and extended the revenue base. Tax authorities acknowledge that GST has made it more difficult to steal taxes, but also increased compliance due to the fear of detection and penalties. Digitising the financial system has made tax evasion more difficult.

The Opposition may suspect that the announcement of record GST collection was timed to influence voters, as it would be a major talking point on nightly television shows and in the following day’s newspapers. The typical suspects in the Congress party, those who accuse Finance Minister Nirmala Seetharaman of violating the Model Code of Conduct may consider filing a complaint with the Election Commission without hesitation.

The positive news should reassure independent voters about the economy’s long-term health. It’s unclear how typical government operations can violate the election code. There was no policy decision to disclose the real tax collection like every month. This is part of the central administration’s continuing process and should not be questioned. The opposition should not dismiss the economy’s steady expansion, as evidenced by the most recent GST collection. There is still room for growth and improvement to ensure an equitable and fair levy on products and services.

Critics argue that the poor bear half of the GST burden, prompting further research into ways to alleviate this. The current income gaps should not be exacerbated by a taxing system that does not differentiate between rich and poor. Despite its difficulty, the mission must be completed.

ABHISHEK VERMA

 

 


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