Central and state governments collected a record ?2.43 trillion in Goods and Services Tax (GST) revenue prior to adjusting for refunds in the first month of the financial year, in spite of the sharp tax rate cuts in last September, data from the finance ministry showed.
In April last year, Centre and states had collected ?2.37 trillion in GST revenue before adjusting for refunds but that was at the previous tax rates and included GST compensation cess, which has been phased out as part of the tax structure overhaul last September. If cess is excluded, last April’s gross collection stands at ?2.23 trillion, indicating 8.7% annual growth in gross collections this April.
The record high gross revenue collection in April this year is in spite of the sharp tax cuts, aimed at stimulating demand. “That shows the taxable value of goods and services have increased after the tax rate cuts, which indicates higher consumption demand,” said a government official, who spoke on the condition of anonymity.
After adjusting for refunds, GST revenue in April stood at ?2.11 trillion. In April last year, net GST revenue receipts of Centre and states was ?2.09 trillion inclusive of cess. Excluding cess, net GST revenue collection grew 7.3% annually in April.
GST collections typically peak in the first month of the financial year, as April's revenue reflects the surge in factory inventory clearances that occur every March to close the books. For FY27, the central government alone has a GST revenue target of ?10.2 trillion, a notch below the ?10.46 trillion it is estimated to have collected in FY26.
April GST collections are typically elevated, and their consistent peak year after year is no coincidence, said Ikesh Nagpal, lead - indirect tax, at tax and consulting firm AKM Global.
“The year-end push in March driven by higher sales, inventory clearances, and book closures naturally spills over into April, making it the strongest month across most fiscal cycles,” he said. Strong April revenue collection signals a robust start to the financial year, led by a sharp 25.8% surge in import-driven revenue, underscoring resilient consumption and trade linkages, Nagpal added.
Energy shock
The Centre’s FY27 GST revenue target and other budget projections were made on 1 February, before the West Asia war began on 28 February. It therefore remains to be seen how consumption of goods and services is affected by the rise in global energy prices. GST is a tax on consumption.
In April, the government slashed excise duty on petrol and diesel and imposed a windfall tax on the export of diesel and jet fuel to protect the balance sheets of oil marketing companies from the global energy shock without causing retail prices of petrol and diesel to increase.
However, the government may at some point be forced to pass rising energy costs on to consumers, as repairing the oil supply chains damaged by the West Asia war could take time.
The finance ministry said in its monthly economic review for April released this week that passing on higher energy costs to the final consumer may be inevitable. Some countries have begun to allow prices to be passed on to end-users—households and businesses—but some are yet to do so, it said.
Saurabh Agarwal, tax partner, EY India, had a word of caution for the coming quarter. “April’s record figures reflect the year-end push for targets by both industry and administrators. As we transition into the new fiscal year, we should anticipate a stabilization in the coming months, with collections likely seeing a sequential dip in both absolute and percentage terms as the market recalibrates,” he said.
Please click here to view the full story on Mint.