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August GST Revenues in INDIA Hit Three-Month Low

(SYLLABUS RELEVANCE: GS 3: Indian Economy)

Why is it in the news?

  1. 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.
  2. 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.
  3. Notably, April recorded a record high of ₹1.87 lakh crore in GST collections.

Breakdown of Revenues

  1. Domestic transactions and services imports contributed to a 14% increase in GST revenues.
  2. Goods imports yielded 3% more taxes.
  3. Central GST (CGST) collections for the month were ₹28,328 crore, while State GST collections reached ₹35,794 crore.
  4. Integrated GST (IGST) collections amounted to ₹83,251 crore, with over half of it coming from goods imports.
  5. Compensation Cess yielded ₹11,695 crore, including ₹1,016 crore from goods imports.

Settlement and Distribution

  1. The government settled ₹37,581 crore to CGST and ₹31,408 crore to State GST from IGST.
  2. 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.

Expert Opinions

  1. 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.
  2. 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.
  3. 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%).

VALUE ADDITION

Overview of the GST Council

  1. 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.
  2. It was formed following the passage of the Constitutional (122nd Amendment) Bill in 2016.
  3. Article 246A of the Constitution grants both Parliament and state legislatures “simultaneous” power to legislate on GST.
                            Composition
Aspect                            Information
ChairpersonUnion Finance Minister
Vice-ChairpersonUnion Minister of State (Finance)

 

State RepresentationEach state nominates a minister in charge of finance or taxation or any other minister as a member.
                      
                              Functions
Aspect                             Information
RecommendationsI) 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 LawsIt plays a key role in the formulation of model GST laws.

 

Rate SlabsThe Council decides on the various rate slabs for GST.

 

 

Recent Changes

  1. The Supreme Court’s decision in May emphasized that recommendations of the GST Council are not binding on Parliament and state legislatures.
  2. 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.

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