GST Collections in July: A Mixed Bag

New Delhi: The Goods and Services Tax (GST) collections for July have shown a 7.5% increase, amounting to Rs 1,95,735 crore. This indicates a slight recovery from the previous month, though the growth rate is slower compared to the same period last year.

Breaking Down the Numbers

Domestic sources contributed a 6.7% increase, totaling over Rs 1.4 lakh crore, based on June transactions. Import-related collections saw a better performance, rising by 9.7% to Rs 52,712 crore. However, the domestic sector's weakness is evident, mirroring the subdued factory output expansion and a significant slowdown in direct tax collections.

Refunds and Liquidity

On a positive note, refunds jumped by 67% to Rs 27,147 crore, enhancing business liquidity. Consequently, net collections grew by 1.7% to Rs 1,68,588 crore. Finance Minister Nirmala Sitharaman has been urging tax officials to expedite refund processes to support businesses.

Regional Variations and Calls for Reform

Several regions, including J&K, Chandigarh, and Goa, experienced a contraction in collections. Meanwhile, major jurisdictions like Delhi, Gujarat, and Maharashtra reported modest growth. The current figures have sparked discussions on the need for GST rate rationalization to address inefficiencies, particularly concerning the inverted duty structure affecting new-age goods.

Looking Ahead

With the cessation of compensation cess, states are increasingly concerned about the slowdown in GST collections. Experts suggest that the GST Council consider measures to boost revenues in upcoming meetings.