Latest GST metrics show mixed revenue and compliance across Indian states

The Story in Brief

GST grossed ₹2.11 lakh crore in July, expanding by 15.4% year-on-year, the second-best growth in FY27. The headline rise reflects uneven internal and external drivers: import IGST grew 26.9% while domestic GST revenues rose 4.5%. The faster pickup in IGST began after the pandemic and is linked to global commodity inflation, higher imports of capital goods and a 10-12% depreciation of the rupee over the past year. The currency fall raised the rupee cost of crude oil, electronics, machinery and chemicals, which together make up about half of total imports and pushed up the import bill.

Gold added to higher IGST collections even as bullion imports fell 22% and supply dropped to a six-year low. Manufacturing WPI inflation was 7.18% in June versus 1.52% a year earlier, while manufacturing growth was weak by HSBC PMI measures. Services saw their slowest growth in 53 months, with real estate and business services recording the strongest rises in charges. Only 16 States/UTs reported post-settlement GST growth above the national average, and just over a dozen had higher-than-average growth. Faster domestic refunds compared with IGST refunds suggest improving compliance and larger credit balances, but input tax credit disputes and litigation remain unresolved. The July numbers may therefore reflect exchange-rate and import effects as much as domestic production, incomes or broad-based consumption.

The Indian Opinion

The figures warrant a cautious reading. Emphasising the headline 15.4% growth without equal attention to the 26.9% rise in import IGST and the modest 4.5% domestic revenue increase could lead to a one-sided view that the economy is uniformly resilient. Likewise, claims that GST buoyancy proves broad-based manufacturing or consumption gains risk overstatement when growth is geographically concentrated in a minority of States and partly driven by import price effects. Celebrating improved refunds and compliance is reasonable, but unresolved disputes and litigation mean the picture is incomplete. With only July data, readers should treat the outcome as a mixed signal rather than definitive proof of nationwide recovery.

Original article: Highs and lows: On GST metrics (www.thehindu.com)

This story was summarised and commented on by AI from the source linked above.