NEW DELHI: India's Goods and Services Tax (GST) collections have shown a robust increase, rising by 10% to nearly Rs 1.75 lakh crore on a gross basis for the month of August 2024. This growth is indicative of very strong economic activity and improved tax compliance, particularly as the festive season approaches in the forthcoming months.

However, the net expansion of the GST kitty has been tempered by a significant rise in refunds. Refunds soared by 38% to just under Rs 25,000 crore, driven primarily by domestic refunds. This has resulted in a net collection growth of only 6.5%, which is slightly below government expectations.

Central GST collections saw an 8.9% increase, reaching Rs 30,862 crore, while state GST collections rose by 7.3% to Rs 38,411 crore. Integrated GST, which includes levies on imports and inter-state sales, experienced a 12.5% increase, amounting to Rs 93,621 crore.

Experts suggest that the 10% increase in collections at the start of the festive season is a positive sign, indicating robust consumption that is expected to improve further in the coming months. The GST Council is set to meet soon to discuss potential rate rationalizations, although a decision is not expected immediately.

The steady increase in GST collections this year, averaging Rs 1.82 lakh crore per month, reflects the ongoing recovery and resilience of the Indian economy. However, the impact of recent floods in some parts of the country may be more evident in the next month's data.

The recent increase in GST collections can be attributed to several key sectors like manufacturing, services, imports, consumer goods, automobiles etc. A significant rebound in imports has been a major driver of the GST mop-up. The integrated GST (IGST) on imports saw a notable increase, contributing substantially to the overall collections. The manufacturing sector has shown strong performance, with increased production and sales leading to higher GST contributions. 

The services sector another major contributor to GST collections including IT, finance, and hospitality, has also played a crucial role. The recovery and growth in these areas along with improved compliance and enforcement measures, have collectively driven the increase in GST collections.

Higher consumption of goods, particularly in the lead-up to the festive season, has also significantly led to increased GST collections from the sale of consumer goods followed by the automobile industry has seen a surge in sales, contributing significantly to the GST revenue.