Govt Looking To Mop Up Rs 1.5 Lakh Crore GST Collection In Coming Months; System Could Be Revamped To Boost Revenues

The central government is hoping that the monthly collections of the goods and services tax (GST) would stabilise around Rs 1.5 lakh crore in the coming few months, helping the overall revenue situation at the Centre and the states.

Accordingly, the figures will surpass the record GST collections of Rs 1.4 lakh crore that was recorded in April this year.

“Spending has gone up and the collections for October and November are expected to stay strong, if not better than the numbers we just saw,” a government source in the know of developments was quoted in a report by the Reuters.

The government will accordingly be commencing its next set of measures to increase the collections as there are indications that the prevalent mechanism has somewhat reached its complete capacity.

Apparently, a group of ministers have been tasked to examine the rationalisation of rates, which could include increasing the rates of some items in the 5 per cent bracket or even moving the first slab upwards to about 6 per cent-7 per cent.

Officials have even recommended the finance ministers at the union and the state levels to merge the 12 per cent and 18 per cent GST slab rates and instead settle for 16-17 per cent as standard rate.

It should be noted that a few years ago, the RBI had estimated the weighted average GST rate at 11.6 per cent, against the estimated revenue-neutral rate of 15-15.5 per cent.

The data released by Ministry of Finance last week showed that the gross GST revenue collected in the month of October 2021 had crossed Rs 1.3 lakh crore. The figure was the second highest ever since introduction of GST, second only to that in April 2021, which related to year-end revenues.

“This is very much in line with the trend in economic recovery. This is also evident from the trend in the e-way bills generated every month since the second wave. The revenues would have still been higher if the sales of cars and other products had not been affected on account of disruption insupply of semi-conductors," the statement from government stated.