Festival rush missing but net GST revenues up 11.1% in November amid sharp drop in refunds

Photo used for representation purpose only.

Growth in Gross Goods and Services Tax (GST) revenues slowed to 8.5% in November from 8.9% in October, with the indirect tax receipts easing to a little over ₹1.82 lakh crore from ₹1.87 lakh crore in the previous month.

Prior to refunds, collections from domestic transactions were 9.4% higher and those from imports were up 5.9%. It must be noted that November’s tax receipts typically pertain to transactions undertaken in October when the festivals of Dipawali and Dussehra occurred. 

Pointing to the month-on-month decline in GST collections, despite the festive season boost, EY India tax partner Saurabh Agarwal said he expects tax receipts to slow down in the next four months of the year. “The global geopolitical scenario and potential consumer spending cuts could further exacerbate short-term economic growth,” he reckoned.

Net GST revenues, after factoring in refunds to taxpayers, increased at a faster pace of 11.1% to hit ₹1,63,010 crore, with domestic transactions yielding 12.5% higher taxes than a year ago, while revenues from imports were up 5.6%. Net revenues had risen 7.9% in October to a tad above ₹1.68 lakh crore

Much of the gap between the slower growth in gross receipts and the higher uptick in net revenues can be attributed to a sharp 19.6% fall in refunds for domestic transactions which stood at just ₹10,111 crore in November. Refunds related to exports grew 6.8%.

In October, refunds to domestic taxpayers had risen 42.8%, while export-related refunds had contracted 2%. In July this year, GST refunds had also contracted by over 19%

Overall, the first eight months of the financial year have now recorded a 9.2% growth in net GST revenues that stand at almost ₹12.91 lakh crore. While this marks a marginal improvement over the cumulative pace of 9% till October, it is still markedly slower than the growth of about 11% penned in to the Centre’s Budget 2024-25 arithmetic.

While gross domestic revenues were up 9.4%, as many as 15 major States recorded slower growth, with seven of them reporting a contraction in tax collections over last November. Just like October, Arunachal Pradesh recorded the sharpest contraction of 23% last month. Nagaland and strife-ridden Manipur also saw a revenue shrinkage again, with receipts dipping 22% and 4%, respectively.

Andhra Pradesh recorded a 10% decline in revenues, while Chhatisgarh’s revenues contracted 1% for the second straight month. Revenues also dipped 1% in Rajasthan. For eight major States, the growth was tepid despite the festive season – including Haryana (2%), Telangana and Punjab (3% each), Madhya Pradesh and Uttar Pradesh (5% each), West Bengal (6%), and Tamil Nadu (8%).

Sikkim led the pack of high growth States with a 52% surge in revenues, followed by the Union Territory of Jammu and Kashmir (25%), Delhi and Tripura (up 18% each), and Maharashtra (17%). Karnataka clocked a 15% rise in revenues in November, while the growth was 12% for Gujarat and 10% for Kerala, Odisha and Assam.

MS Mani, partner at Deloitte India, termed the slower growth in some large states and the contractions in States like Rajasthan, Andhra Pradesh and Chhattisgarh “an area of concern” as they have a significant manufacturing presence and considerable economic impact.