The GST regime continues to make significant impact on India's fiscal federalism since its inception. The journey has completed six years and when we look at the fiscal story so far, it is understood that the Union government has gained a lot from GST but most of the States have not been able to achieve the desired annual growth of 14% from the base year even after six years. The RBI report, which analyses the State's budgets, shows that the latter's revenues from GST (both SGST and share of IGST) has grown at a compounded annual rate of just 7.8 %. This is mainly because of the rate reduction without considering RNR, structural issues on revenue sharing formula and IGST settlement.

On the other side, the revenue performance of Union government under GST regime is remarkable especially since 2021-22. The first full financial year 2018-19 witnessed healthy growth with Rs 11.7 lakh crore even among the series of initial technical glitches and other confusions. In the backdrop of rate reduction without considering the 'Revenue Neutral Rate', the collection during financial year 2019-20 was below estimates and marginally grew at 4% over previous financial year to reach Rs 12.2 lakh crore. While the early months of 2020-21 were heavily impacted by the Covid-19 pandemic, there was an improvement in the later months of the year and managed to reach Rs 11.32 crore, even though it was lower than the previous year. There was a strong recovery in 2021-22, with total collections reached Rs 14.76 lakh crore, which is 28% higher than the previous year. This trend has continued in 2022-23 also, the collection raised to Rs 18.10 lakh crore, stood annual growth at 22%.

The average monthly gross revenue collection has risen from Rs 89,000 crore in 2017-18 to Rs 1,58,000 crore in the financial year 2022-23. This year so far the average monthly collection again gone up to 1.72 lakh crore. The monthly Average Gross GST Revenue from the year of inception are given below:

When we look at the GST monthly collection of the first quarter of FY 2023-24, the Gross GST collection in April 2023 is all time high, Rs 19,495 crore more than the next highest collection of Rs. 1,67,540 crore. For the first time gross GST collection has crossed Rs.1.75 lakh crore mark. It also records the highest ever tax collection on a single day, on 20th April 2023, Rs. 68,228 crore was collected through 9.8 lakh transactions. The gross Good & Services Tax (GST) revenue collected in the month of May, 2023 is Rs.1,57,090 crore which is 12% higher than the same month last year. In June 2023, the gross GST revenue collected amounted to Rs.1,61,497 crore which is 12% higher than the same month last year. It is for the fourth time, the gross GST collection has crossed Rs. 1.60 lakh crore mark. The average monthly gross GST collection for the first quarter of the FY 22-23 & FY 23-24 are Rs.1.51 lakh crore and Rs.1.69 lakh crore respectively.

This growth indicates hat the economy has fully recovered from the impact of the pandemic. It also shows the favorable impact of various policy and administrative measures that have been taken by the GST Council for the last few years. The initiatives like enhancement of system capacity, nudging non-filers after last date of filing of returns, auto-population of returns, blocking of e-way bills and passing of input tax credit for non-filers, e-invoicing, data analytics, use of artificial intelligence etc. have led to consistent improvement in the filing of returns and thereby revenue especially for the last two years. Various rate rationalisation decisions to correct the inverted duty structure have also contributed largely to this account.

Moreover, the Central enforcement agencies have conducted nationwide searches and raids places of business for suspected tax evaders. The Director General GST Intelligence (DGGI) have detected evasion to the tune of Rs 1,01,300 crore in 2022-23. Of this, recovery of Rs 21,000 crore have been made. In 2021-22, they detected evasion of over Rs 54,000 crore and made a tax recovery of over Rs 21,000 crore. In 2022-23, the total number of evasion cases has gone up from 12,574 to 14,000. In a reply to the Lok Sabha in March, 2023, the Finance Minister said that total GST evasion detected between July 2017 to February 2023 was close to Rs 3.08 lakh crore, of which over Rs 1.03 lakh crore was recovered. GST authorities had arrested 1,402 persons for evading taxes in the last five-and-a-half years till February 2023.

Kerala's GST revenues up in first quarter FY 2023-24

As per the state-wise data on national-level GST revenues performance for June 2023 published by PIB, the State has been able to collect Rs. 2725 core in June 2023 which recorded 26% growth over same month of previous year. The State had reported an 11% increase in May 2023 over May 2022 and 12% increase in April. Collection in April 2023 had stood at Rs.3,010 crore, going up from Rs.2,689 crore in the same month in 2022. State-level GST figures for May 2022 and 2023 put Kerala's collection at respectively Rs.2,064 crore and Rs.2,297 crore. It is clear from the above statistics that the State's fiscal performance under GST regime has shows steady increase in the first quarter of 2023-24 compared to the corresponding period in 2022-23.