In December 2024, India’s Goods and Services Tax (GST) collections rose to Rs 1.77 lakh crore, a 7.3% increase compared to December 2023, when it stood at Rs 1.65 lakh crore. Notably, this marks the tenth consecutive month where collections exceeded the Rs 1.7 lakh crore threshold. However, the December figure remains lower than April’s peak of Rs 2.1 lakh crore, and the growth rate was the slowest in the last three months.

Quarterly Analysis

The October-December 2024 quarter saw average GST collections at Rs 1.82 lakh crore, slightly higher than Rs 1.77 lakh crore in the July-September period. Year-over-year, GST revenues for this quarter grew by 8.3%, signaling steady economic progress despite fluctuating growth rates within the year.

Breakdown of Revenues

• Net Domestic Revenue: Recorded an increase of 6.7%, reaching Rs 1.21 lakh crore.
• Net Customs Revenue: Declined by 7.3% compared to the same period last year.
• Refund Trends: Domestic refunds surged by 31%, while import refunds rose significantly by 64.5%, reflecting dynamic changes in trade and tax compliance patterns.

Economic Implications

The growth in GST revenues suggests better-than-expected economic activity in the latter half of the year. It indicates improvements in domestic manufacturing and consumption patterns, aligning with the government’s “Atmanirbhar Bharat” initiative. However, the slower growth rate in December compared to earlier months points to potential challenges in sustaining this momentum.

Impact on the Indian Economy

India’s economic growth in the second quarter of FY24 slowed to 5.4%, a seven-quarter low, from 6.7% in the April-June period. Despite this, the Reserve Bank of India (RBI) maintains an optimistic outlook, forecasting a GDP growth of 6.6% for FY25. The steady GST performance aligns with these projections, hinting at a gradual economic recovery.

Sectoral Insights

The sharp increase in import refunds, compared to domestic refunds, highlights evolving trade dynamics. The growth in domestic collections is a positive sign, suggesting increased compliance and economic activity within the country. On the other hand, the decline in customs revenue could reflect global trade challenges or shifts in import patterns.

Looking Ahead

The GST collections in December underscore the resilience of India’s taxation framework and economic policies. While challenges such as slower growth and declining customs revenues exist, the overall trajectory remains promising. The consistent rise in domestic refunds and revenue also points to improved operational efficiency in tax administration.

Conclusion

The rise in GST collections to Rs 1.77 lakh crore for December 2024 provides a mixed yet optimistic outlook for India’s economy. While YoY growth continues, the pace has moderated, calling for sustained efforts in boosting consumption, trade, and compliance. With initiatives like Atmanirbhar Bharat gaining momentum, the coming months will be critical in defining the trajectory of India’s economic recovery.