Growth in India’s Gross Goods and Services Tax (GST) collections slowed marginally to 10% in August from 10.3% in July, with revenues of nearly ₹1.75 lakh crore. However, the rise in net receipts slumped to 6.5%, the second weakest in this financial year, from 14.4% in the previous month.

Sequentially, gross revenues were 3.9% lower in August vis-a-vis July, when they had hit their third-highest monthly tally a tad over ₹1.82 lakh crore. However, net revenues, after adjusting for refunds to taxpayers, were ₹1,50,501 crore in August, marking a sharper 9.2% drop from July’s kitty.

The uptick in July’s gross GST revenues had marked a sharp recovery over June, when growth had hit a three-year low of 7.6%. Net receipts growth was 6.3% in June

In August, gross revenues from domestic transactions were up 9.2%, improving from an 8.9% rise in July, while receipts from imports rose 12.1%, slightly slower than the 14.2% growth in the previous month. After accounting for refunds, net domestic receipts grew just 4.9%, while revenues from goods imports expanded 11.2%.

The Central Board of Indirect Taxes and Customs said August’s GST revenue figures are provisional, and the actual numbers may “slightly vary” on finalisation. It must be noted that GST revenues collected in August generally pertain to economic activity in the preceding month of July.

A significant part of the decline in net revenues in August over July may be attributed to a sharp 50.2% sequential spike in tax refunds effected during the month, adding up to ₹24,460 crore. This constitutes a 38% rise from last August and includes a 59.6% surge in refunds for domestic transactions.

Domestic refunds

By contrast, domestic refunds had slipped 34.1% year-on-year in July, and overall refunds were 19.4% down to ₹16,283 crore. Sequentially, those refunds were 18.4% below June’s levels.

There were significant variations in revenue trends within States, with as many as six seeing a contraction in revenues from last August. These include Meghalaya and Nagaland (down 18% each), Mizoram (-13%), Chhattisgarh and Arunachal Pradesh (-10% each), and Andhra Pradesh (-5%).

The union territory of Jammu and Kashmir, along with Kerala and Tripura, grew at the same pace as the national average of about 9%, but 11 States recorded milder growth, including Uttarakhand where revenues were flat. Revenues rose just 4% in Telangana and Goa, 5% in Rajasthan and Jharkhand, 6% in Gujarat and West Bengal, and 7% in Tamil Nadu and Punjab.

Deloitte India partner M.S. Mani said a deep dive was warranted to assess the differences among States’ collections. “The single digit increase in large States like Gujarat, Andhra Pradesh and Tamil Nadu would engage the attention of the tax authorities in these States,” he reckoned.

Manipur recorded the highest spike of 38%, albeit on a lower base revenue of ₹40 crore last August when the State was in the grip of widespread unrest. Delhi (22%), Assam (18%) and Himachal Pradesh (14%) recorded the fastest growth after Manipur. Maharashtra (13%), Haryana and Madhya Pradesh (12% each), followed by Karnataka, Odisha and Uttar Pradesh, whose revenues grew 11% each, were the other States to outperform overall GST revenue growth trends in August.

In the first five months of 2024-25, overall GST revenues have now risen 10.1% to almost ₹9.14 lakh crore, while net receipts are 10.2% higher at over ₹8.06 lakh crore. After accounting for refunds, which are also up 10% from last year, net domestic revenues have grown 12.3%, while goods imports have yielded a 2.6% rise in tax receipts.

With the festive season about to begin, revenues are expected to surge in the next few months, said Abhishek Jain, indirect tax head and partner at KPMG. He termed the significant surge in processing of GST refunds in August “encouraging”.