Signs of Economic Recovery: October 2020 GST Collection Exceeds One Trillion

The Government of India has reported that the Goods and Services Tax (GST) collection for October 2020 crossed the Rs. 1.05 trillion mark, marking the highest collection since February 2020. This significant achievement indicates a clear indication of the Indian economy starting to recover from the challenges posed by the global pandemic.

Increased GST Revenue in October 2020

According to the Ministry of Finance, the GST revenue for October 2020 was Rs. 105,155 crore, which is a 10.25% increase compared to the same period last year. Additionally, it is 10.1% higher than the indirect tax collected in September 2020. This growth trend has been consistent, with the following percentages for each month leading up to October:

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Factors Contributing to GST Revenue Growth

The increase in GST revenue could be attributed to several factors, including increased festival demand, input tax credit, and the business reconciliation process that was due in September 2020. If this positive growth is sustained into the end of 2020, it is expected to significantly reduce the GST compensation shortfalls for states in India. The overall GST collections for October 2020 include a center government revenue of Rs. 44,285 crore and state government revenue of Rs. 44,839 crore.

Regional Highlight

Andhra Pradesh and Chhattisgarh saw the highest GST revenues, with a combined 26% share. Other states such as Jharkhand (23%), Rajasthan (22%), and Odisha (21%) also contributed significantly. Industrial states like Gujarat (15%) and Tamil Nadu (13%) saw a substantial percentage of the total revenue, emphasizing the importance of industrial growth in these regions.

Business Association Report

The Consortium of India Business Association, representing MSMEs (micro, small, and medium enterprises), has reported that the October 2020 GST revenue growth is a strong sign that the Indian economy is moving towards normalcy. The import product GST revenue was reported to be 9% higher, while domestic business transactions saw a 11% increase. However, the official confirmation of sustained and consistent economic growth will need to wait until the end of 2020.