The most satisfying aspect is that the above increase was possible despite the uncertainty associated with the implementatio...
Editorial GST: The reform process is proving beneficial: The Goods and Services Tax (GST) collection in September stood at Rs 1.89 lakh crore. This amount is 9.1 percent higher than the collection in the same month of the previous year (2024) (Rs 1.73 lakh crore).
The most satisfying aspect is that the above increase was possible despite the uncertainty associated with the implementation of reduced rates of GST from September 22. It is worth mentioning that, from September 22, the number of GST rate slabs in the country was reduced from four to two.
This decision resulted in a reduction in the prices of at least 375 items. The items with reduced tax rates include household appliances and food items to motor vehicles and electronic goods. This rationalization of rates was described as a major economic reform by the Modi government. At the same time, economists had expressed the opinion that the rationalization process will not reduce the amount of GST collections; it will increase it. The September figures indicate that the above thinking is correct, although any concrete claim about this can be made only after the collections of the next two months (October-November).
The GST system is based on the principle of ‘one nation, one tax’. Before the implementation of this system, the tax and other excise rates on goods and services were different in each state or union territory of the country. GST has put an end to this confusion. Although some states still call this system flawed, the trend of continuous increase in GST collections shows that while rationalization and rationalization of the tax system has proven beneficial for consumers and businesses, it has also increased the financial income of the state governments. More importantly, the new GST regime has reduced tax evasion and strengthened the tax compliance.
One proof of this is the monthly increase in GST collections for the last 9 months. The total national GST collection during the five months from April to August this year was Rs 10.04 lakh crore, while during the same five months of 2024, it was Rs 9.9 lakh crore. A 9.9 per cent increase in collection is, if not miraculous, then certainly healthy. The Reserve Bank of India, through its quarterly monetary policy announcement on Wednesday, left the repo and reverse repo rates unchanged. They will remain at 5.5 and 5.0 per cent respectively. The bank also left its previous forecast of our country's annual economic growth rate at 6.8 per cent unchanged.
The Indian economy's continued good health despite the US's imposition of 50 per cent tariffs on Indian exports and the imposition of a $100,000 visa fee for H-1B visas is a welcome development. This development may give the Modi government the strength not to bow down to American bullying. Despite this, efforts to further strengthen the economy and reduce government red tape should continue. India's prospects of becoming the world's third largest economic power by the end of this calendar year are currently on track. They should continue to stay on track at all costs.
