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A Goods and Services Tax (GST) monthly collection target of Rs 2 lakh crore could be a realistic goal for the fiscal year 2025-26, though it initially seems ambitious for the fiscal year 2024-25, according to tax expert Rajat Mohan, Executive Director at MOORE Singhi.
India set a new record in April 2024 with the highest-ever GST collection of Rs 2.10 lakh crore. While this achievement sets a high benchmark, Mohan emphasised that April typically records the highest revenue and should not be viewed as a standard for other months.
When asked if GST collections could maintain a monthly run rate of over Rs 2 lakh crore throughout this fiscal year, as achieved in April, Mohan said, “Achieving a consistent monthly collection rate of Rs 2 lakh crore may initially seem ambitious. Applying the nominal annual revenue growth rate of 14 per cent, as anticipated by the GST (Compensation to States) Act of 2017, we foresee nearly Rs 1.9 lakh crore for the upcoming fiscal year. Nonetheless, with strategic adjustments, a monthly collection target of Rs 2 lakh crore could be realistic for FY 2025-26.”
The fiscal year 2023-24 represents a significant landmark with total gross GST collections surging to over Rs 20 lakh crore, marking a robust increase of 11.7 per cent over the previous fiscal year. This escalation has resulted in an average monthly collection of approximately Rs 1.68 lakh crore, reflecting a steady 11.5 per cent year-on-year growth.
Mohan outlined several pivotal strategies to achieve and sustain the ambitious target:
Enhancing Compliance:
He highlighted the importance of enhancing compliance, noting that compliance rates have improved significantly since GST’s inception in July 2017. Recent data from the GST Portal shows compliance exceeding 90 per cent in January 2024. “While enhancing compliance is essential, relying solely on it for revenue growth may not be sufficient,” he noted.
Setting up GST Appellate Tribunal
Establishing a dedicated GST Appellate Tribunal (GSTAT) is another crucial strategy. “Frequent legislative changes and persistent ambiguities have increased GST-related litigations, burdening the judiciary. Establishing a dedicated GSTAT would streamline dispute resolution, facilitate efficient assessments, and expedite revenue recovery,” Mohan explained.
Digitalisation of Tax Assessments
Embracing technological advancements, such as integrating chatbots for initiating show cause notices and managing hearings, will modernize India’s tax administration. “This modernisation will expedite dispute resolutions, encourage accurate tax payments, and ultimately boost collections,” said Mohan.
Standardising GST Audits
Additionally, implementing uniform GST audit procedures across states will enhance compliance, reduce complexities, and minimise tax evasion. Mohan believes that standardised audits are expected to significantly increase overall GST revenue collection.
The fiscal year 2023-24 marked a significant milestone with total gross GST collections surpassing Rs 20 lakh crore, reflecting an 11.7 per cent increase over the previous fiscal year. This resulted in an average monthly collection of approximately Rs 1.68 lakh crore, showing a steady 11.5 per cent year-on-year growth.
By focusing on enhancing compliance, establishing a dedicated appellate tribunal, digitalising tax assessments, and standardising audits, India can not only meet but potentially exceed its GST revenue targets in the coming years. These strategic initiatives will ensure robust financial health and economic stability.
“With strategic adjustments and continued focus on key growth areas, a monthly collection target of Rs 2 lakh crore is within reach, heralding a new era of fiscal strength for India,” Mohan said.
