The Goods and Services Tax (GST) collections skyrocketed to a record ₹2.10 lakh crore (trillion) in April, the finance ministry announced on Wednesday, marking a significant 12.4 per cent year-on-year increase.

“The growth was driven by a strong increase in domestic transactions (up 13.4 per cent) and imports (up 8.3 per cent),” the ministry.

The previous high for GST collections was ₹1.87 lakh crore collected in April 2023. This robust performance has fueled expectations of the next wave of GST reforms.

The April 2024 breakdown revealed healthy growth across all sectors, according to the ministry.

The Central GST (CGST) pool ₹43,846 crore; State GST (SGST) collection at ₹53,538 crore; and Integrated GST (IGST) was ₹99,623 crore (including ₹37,826 crore from imported goods).

“There are no dues pending on account of IGST settlement to the states,” finance minister Nirmala Sitharaman said in a post on X (formerly Twitter).

Caution

Economists, while welcoming the strong GST performance as a potential sign of a pick-up in domestic demand and consumer spending, cautioned against over-interpreting the data.

Sanjay Chhabria, senior director, indirect tax at Nexdigm, said the significant rise in domestic transactions can be attributed to consumer spending being focused on beating the summer heat, with purchases such as air-conditioners, beverages, as well as increased travel during long vacations from schools and colleges.

“This one-time leap is a new benchmark, which reflects robust economic buoyancy and high consumer spending,” Chhabria said

Tax Connect Advisory Services LLP Partner Vivek Japan said from July 2017 when GST started with an average monthly revenue of around ₹0.9 lakh crore to April 2024 when it grossed ₹2.1 lakh crore, GST revenues have witnessed an approximate growth of 13 per cent per annum on average.

“Considering inflation of 5 per cent and GDP growth of 7 per cent, there has been an average buoyancy of 1 per cent on an average per annum over the last seven years,” Jalan said.

“The GST collections displayed an impressive double-digit expansion, rising to ₹2.1 trillion in April 2024, reflecting the collections for the previous month, which typically include year-end adjustments made by the taxpayers,” Aditi Nayar, chief economist, ICRA said.

“We anticipate that the CGST collections exceeded the FY2024 RE by ₹250-300 billion, suggesting an embedded growth of 9 per cent to meet the target set in the Interim Budget Estimates for FY2025,” Nayar said.

The impressive GST receipts have reignited discussions about the next wave of reforms under “GST 2.0”.