GST surge dispels apprehensions by States

The strong momentum of GST collections belies not only the near absurd fear of large falls being circulated, it also refutes the apprehension expressed by States about a perceived decline in GST revenue post rationalisation, SBI Research said.

Defying wild speculations of a great fall postulated by many economic voices, Gross GST collections for October 25 (actually returns of September filed in October) increased by 4.6 per cent to Rs1.96 lakh crore.

While the gross domestic collection increased by 2 per cent YoY, the Gross import revenue for October rose by 12.8 per cent. E-way bill generated in the month of September was highest ever at Rs 13.2 crore.

As an insignia of enhanced ease of business processes, total refund for October stands at Rs26,934 crore, clocking a YoY growth of 39.6 per cent.

“Assuming that states experience same gains (and losses) post rationalisation as in October, we project GST revenue for FY26 wherein on a very rudimentary basis, most of the states seem to experience positive gains for the entire fiscal post rationalisation confirming overall states should remain Net Gainers post GST rationalisation,” said Dr Soumya Kanti Ghosh, Group Chief Economic Advisor, State Bank of India.

While the Union’s own estimate of likely revenue foregone due to GST rate rationalisation was Rs48,000 crore, many research agencies, and their key faces had jumped the guns, postulating revenue losses that had a stratospheric cap of Rs10 lakh crore.

“Evidence from earlier rounds of GST rate changes, such as those in July 2018 and October 2019, suggests that rationalisation does not necessarily weaken revenue collections. Instead, the evidence points to a temporary adjustment phase followed by stronger inflows,” the report noted.