(SYLLABUS RELEVANCE: GS 3: Indian Economy)
Why is it in the news?
- According to Finance Ministry, in August, India’s GST revenues reached ₹1,59,069 crore, marking a 10.76% growth. This growth rate was slightly lower than July’s 10.8%, which was the slowest in two years. However, revenues in August were 3.65% lower than the ₹1.65 lakh crore collected in July.
- Despite this, the first five months of 2023-24 saw an average GST revenue growth of 11.3% compared to the same period last year.
- Notably, April recorded a record high of ₹1.87 lakh crore in GST collections.
Breakdown of Revenues
- Domestic transactions and services imports contributed to a 14% increase in GST revenues.
- Goods imports yielded 3% more taxes.
- Central GST (CGST) collections for the month were ₹28,328 crore, while State GST collections reached ₹35,794 crore.
- Integrated GST (IGST) collections amounted to ₹83,251 crore, with over half of it coming from goods imports.
- Compensation Cess yielded ₹11,695 crore, including ₹1,016 crore from goods imports.
Settlement and Distribution
- The government settled ₹37,581 crore to CGST and ₹31,408 crore to State GST from IGST.
- After regular settlement, the total revenue for the Centre and the States in August 2023 stood at ₹65,909 crore for CGST and ₹67,202 crore for SGST.
- ICRA’s chief economist, Aditi Nayar, mentioned that the headline GST number was slightly lower than their forecast but overall collections for the year remained robust.
- MS Mani, partner at Deloitte India, noted that key manufacturing and consuming states showed an increase ranging from 10% to 23%, indicating widespread domestic consumption growth.
- Some states, like Manipur, rebounded with a 17% growth in August after a contraction in July. Tripura recorded the highest growth at 40%, followed by Arunachal Pradesh (39%), Nagaland (37%), and Goa (36%).
Overview of the GST Council
- The GST Council is a Constitutional body established to oversee and make recommendations on issues related to the Goods and Services Tax (GST) in India.
- It was formed following the passage of the Constitutional (122nd Amendment) Bill in 2016.
- Article 246A of the Constitution grants both Parliament and state legislatures “simultaneous” power to legislate on GST.
|Chairperson||Union Finance Minister|
|Vice-Chairperson||Union Minister of State (Finance)|
|State Representation||Each state nominates a minister in charge of finance or taxation or any other minister as a member.|
|Recommendations||I) The Council recommends important GST-related issues to both the Union and the states.|
II) This includes determining which goods and services should be subjected to or exempted from GST.
|Model GST Laws||It plays a key role in the formulation of model GST laws.|
|Rate Slabs||The Council decides on the various rate slabs for GST.|
- The Supreme Court’s decision in May emphasized that recommendations of the GST Council are not binding on Parliament and state legislatures.
- Some states, like Kerala and Tamil Nadu, have welcomed this decision, as it allows them more flexibility in accepting recommendations based on their specific needs and preferences.