Booming economy sends GST collection to record levels, but is Kerala keeping up?

GST collections in India hit an all-time monthly high in April, rising 12 per cent year-over-year to ₹2.36 lakh crore. Union Finance Minister Nirmala Sitharaman said the record figure is a testament to the country's economic resilience and financial stability.

Economists echoed the finance minister’s view, noting that easing inflationary pressures, combined with improved tax collection efficiency, contributed to the surge. However, they pointed out that the figures represent transactions made in March —the final month of the 2024–25 financial year—a period typically marked by heightened financial activity.

According to the latest government data released on Thursday, domestic GST collection in April grew by 10 per cent year-on-year, reaching ₹1.9 lakh crore. Of this, the Central GST (CGST) accounted for ₹48,634 crore, while the State GST (SGST) contributed ₹59,372 crore.

India’s easing inflation, which stood at 3.34 per cent in March, supported domestic consumption and contributed to improved manufacturing activity. “Of course, inflation is a factor here. The manufacturing sector is resilient and in good shape, which in turn helped contribute to the 12 per cent rise in GST collection,” said Mary George, former Chairperson of the Kerala Public Expenditure Committee.

She also noted that efforts by the central government to maximise the efficiency of the tax collection system played a key role in the strong figures. “After the introduction of GST in 2017, the government established an authority to curb tax evasion. Finance Minister Sitharaman directed the officials to crack down on fraud in the system, and I believe we are now witnessing the success of those measures,” Mary added.

Government data also showed that revenue from imported goods rose 20 per cent to ₹46,913 crore. Meanwhile, the Integrated GST (IGST) collection stood at ₹1.15 lakh crore.

State-wise tax collections also improved in April. Maharashtra and Karnataka recorded an 11 per cent rise in GST collections, while Telangana posted a 12 per cent increase and Gujarat reported a 13% growth. Economists Onmanorama spoke to opined that these are key producer states, and the uptick in their collections points to strengthened economic activity and industrial performance.

Kerala, too, recorded a 5 per cent rise in GST collections, at ₹3,436 crore, compared to ₹3,272 crore in April 2024.

From the 4,25,900 taxpayers registered in the state, ₹1,843 crore was collected under the CGST scheme, while ₹1,593 crore went to the state's coffers. The tax collected under the SGST rose by 7.6 per cent compared to 2.8 per cent rise in CGST from the state.

The rise in tax collection in Kerala is a sign of heightened economic activity, according to Dr K Ravi Raman, a member of the State Planning Board. “This is a positive sign. It reflects increased business activity. At the same time, consumption in the state is also rising, a clear indicator of economic prosperity,” he said.

Dr Raman added that there is a notable increase in Kerala's manufacturing sector, further underscoring the state's efficiency of GST governance.

However, Mary George cautioned that Kerala’s economy still requires close scrutiny and suggested that high inflation in the state may have artificially inflated the tax collection figures. “Kerala had the highest inflation rate in the country, and this 5 per cent increase in GST collection isn’t particularly impressive compared to other states,” she said.

Mary also criticised the efficiency of the state’s tax administration. “The steps state tax officials took to improve collection are still lagging. If they had operated at full efficiency, GST collections in Kerala could have seen a 50 per cent increase,” she added.