The curious case of GST and missing monthly data

From an average monthly revenue of Rs 85,000 crore in 2017 to over Rs 1.7 lakh crore now, the indirect tax regime has come a long way. But now there are new gripes.
(Express Illustration)
(Express Illustration)

Good economic data is rarely considered bad news. But it appears so in the case of indirect tax collections.

Monthly revenue haul under the Goods and Services Tax (GST) is touching record highs and such a razzle-dazzle has no equal in history. But like beauty that cannot escape malice and envy, GST's prosperity seems to be gathering a hostile glance from taxpayers, businesses and critics alike.

Perhaps to avert the negative gaze, authorities seem to have decided to give the indirect tax regime an anti-evil eye charm by withholding monthly data dispatches. This may or may not be endowed with special protective powers, but the absence of the monthly collections will likely contain breeding resentment that the government is overtaxing consumers.

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Ironical, but the move comes just when officials were expected to raise a cheering toast marking GST's seventh anniversary. If none other than the Prime Minister Narendra Modi extolled GST as the game changer last year, this time on July 1 -- designated as the national GST Day -- there was a knockout silence. In fact, the Ministry of Finance didn't even grace the customary press conference and topping it all, it even skipped the release of monthly data altogether.

How and why the coyness has fuelled concerns

From the government's perspective, perhaps modesty is a better trait than pounding the drum over bulging national coffers now that the GST regime has stabilised.

But others have raised concerns over how it violates the basic tenets of data transparency and accountability, which Finance Minister Nirmala Sitharaman often talks about. In fact, our economic data releases as it is are under a cloud of suspicion and the government should be making efforts to release as much granular data as it can. And often.

For instance, advanced economies release monthly GDP data, whereas India's quarterly growth numbers itself come with a lag of two months.

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Regardless of the reason, one thing is certain. That this government is keen on winning the perception battle. The fact makes the coyness all the more odder since until now, the monthly GST data, released on the first day of every month, gave the government a good stage to showcase its economic priestcraft.

Economists who have analysed the data also concede that the effective tax rate under the GST regime has reduced compared to pre-GST era, but on balance, everyone else only saw the king in his counting house counting out money.

Higher collections, which is a firm indicator of better compliance, seems to have manufactured doubt that the government was unreasonably taking refuge in the wallets of households, who are as it is burdened with high prices and low incomes.

From an average monthly revenue of Rs 85,000 crore in 2017 to over Rs 1.7 lakh crore now, the indirect tax regime has indeed come a long way. In FY23, monthly GST collections averaged Rs 1.51 lakh crore, while in FY24, they averaged Rs 1.68 lakh crore.

The current fiscal began with a bang as the monthly mop-up touched a record high of Rs 2.10 lakh crore in April, while collections in May and June stood approximately at Rs 1.73 lakh crore each. In other words, revenue during the first quarter of April-June stood roughly at Rs 5.57 lakh crore.

Who really benefits from exemptions?

Even as there's disagreement over GST rates in general, a working paper makes the case for eliminating exemptions and that such a move won't burden taxpayers at all.

The working paper titled 'Distributional Impact of Indian GST' by the National Institute of Public Finance and Policy (NIPFP), an autonomous research institute under the Ministry of Finance, found that consumers with higher average expenditure benefit the most from GST exemptions both in rural and urban areas, puncturing the dominant belief that tax exemptions benefit the lower strata of consumers. Hence, the paper suggests that an expansion in the tax base by bringing exempted goods and services under GST may not be regressive.

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If exemptions benefit big spenders, low tax rates benefit those with lower average monthly expenditures and hence it recommended a status quo on this slab. For instance, the consumption of items under very low tax slab of exempt to 5% comprise just 4-8% of the average monthly expenditure.

However, those under low tax rate of 5% account for 18.5-36.5% of average monthly expenditure and the lowest strata of consumers benefit the most from this slab across regions. Therefore, any attempt to increase tax rate on these items may increase their tax burden, it concluded.

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