The Goods and Services Tax (GST) collections for May 2024 stood at ₹1.73 trillion, reflecting a 10 per cent year-on-year increase, the finance ministry reported on Saturday. This marks a moderation from April’s record high of ₹2.1 trillion.

The finance ministry attributed the growth primarily to a 15.3 per cent surge in domestic transactions, signalling robust consumer spending and business activity. However, imports declined 4.3 per cent, possibly because of a weakening global demand.

“The strong domestic performance helped drive overall GST revenue upward,” the ministry noted.

“These collections, relating to supply transactions in April for which GST was paid in May, suggest a new normal of over ₹1.7 trillion in FY25 compared with ₹1.6 trillion in FY24,” M.S. Mani, partner at Deloitte India, said.

“This aligns with recent GDP estimates indicating a robust economy, largely unaffected by the election season or heat waves. The stability in GST collections across recent months reflects the maturity of the GST system, bolstering confidence for future reforms without significant revenue concerns.”

Vivek Jalan, partner at Tax Connect Advisory Services LLP, highlighted that the 14 per cent increase in domestic collections during the election months is partly due to the time-barring period for issuing notices for FY 2019-20 and the consequent partial admittance of issues by taxpayers.

Abhishek Jain, indirect tax head and partner at KPMG, observed that while collections moderated after the year-end peak, the 10 per cent year-on-year growth and 15.3 per cent increase in domestic GST collections are notable.

“This demonstrates the robustness of the domestic economy,” Jain said.

Saurabh Agarwal, tax partner at EY India, pointed to increased GST collections from developing regions such as Jammu & Kashmir, Manipur, Puducherry, and Arunachal Pradesh as indicators of growing consumption and broader economic progress.

“In Delhi and Uttar Pradesh, election spending and purchases of fans, coolers, and ACs due to higher temperatures may have boosted collections,” Agarwal noted.

He warned that the decline from April’s peak could be attributed to year-end tax payments and stagnant auto sales, with summer heatwaves potentially leading to flat or lower GST collections in June 2024.