Delhi’s revenue collections from the state Goods and Services Tax (GST) hit a record ₹2,898 crore in April, on the back of stronger compliance, economic recovery and increasing prices. The collections are also significantly higher than they have ever been in April, since GST was introduced in July 2017, showed state government data.
To be sure, this comes at a time when the country registered a record GST collection of ₹1.68 lakh crore in April, suggesting that collections were robust across several states. The rise, according to experts, was because of increasing consumer demand (especially in sectors that were affected by the pandemic), improved compliance systems, and increasing inflation across the board.
In April 2018, Delhi collected ₹2,075 crore in SGST, a number that stayed nearly flat at ₹2,059 crore in April 2019. Collections plummeted in April 2020 to ₹320 crore, with the nationwide lockdown to curb the spread of Covid-19 imposed in March that year shutting non-essential economic activities and severely restricting movement.
Collections picked up to ₹2,325 crore in April 2021, which was the previous highest single-month collection for the Capital.
The state collected a total of ₹28,500 crore revenue as state GST and Value Added Tax in the 2021-22 financial year that ended on March 31.
The record revenues will help the government put in place landmark reforms, Delhi deputy chief minister Manish Sisodia said.
“The Delhi government will proactively take steps to augment revenue, while providing user-friendly service to genuine taxpayers. The record revenues realised this year will help us serve the residents of Delhi even better. We will unveil landmark initiatives in education, health and employment sectors this year,” said Sisodia, who is also the state’s finance minister.
Delhi GST commissioner Ankur Garg said that while the biggest contributor to the growth in GST collection has been an overall buoyant economy, several steps taken by the department have also contributed to this increase.
“We are leveraging data analytics, with a focus on widening the tax base, identifying cases of fraud, fake firms, and augmenting revenue by targeting fraudulent ITC [income tax return] claims and critically examining tax filing by organisations against related variables like expenses and pre-GST financials,” Garg said.
Suyash Rai, fellow at Carnegie India, said, “While the year-on-year growth of 24.6% over April 2021 looks good, if we look at the data over the long run, we see that over the last four years, the compounded annual growth rate in GST collection has been 8.7%, and the average retail inflation has been 5.5 percent. So, the real growth has been about 3%. Further, in the last two years, because of temporary disruptions in demand and supply in some of the months, other months have seen more consumption than usual. Months when lockdown was in place and when the second wave was raging, demand was affected. Many products have seen significant supply-side disruptions. All this makes it difficult to conclude that this impressive increase in GST collection signals a proper economic recovery.”
Brijesh Goyal, chairman of the Chamber of Trade & Industry, said a host of steps by the Delhi government have helped whet consumer appetite in the city. “The economy is reviving as demand is rising once again. Footfall in markets is also growing,” said Goyal.
Rakesh Gupta, a Delhi-based chartered accountant, said, “The April numbers are actually GST collected on business in March 2022, which happens to be the last month of the financial year, when business is generally higher.”