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GST collection at all-time high

Date: 02 January 2021 Tags: Miscellaneous


Goods and Services Tax (GST) collections in December rose 11.6 percent year-on-year to Rs 1, 15,174 crore, the highest level since its rollout in 2017.



  • Following the outbreak of Covid-19 pandemic, GST revenue collections had been posting a contraction and was at a lower level than the previous year.

  • The GST revenue collections remained in negative territory for the first five months of this financial year, with a record low collection of Rs 32,172 crore in April, following the lockdown in the country in the wake of the Covid-19 pandemic.

  • December marked the fourth month in which GST revenue collections have posted a year-on-year growth. The increase in percentage terms is also aided partly by a low base effect.

  • GST collections in December gained support from higher festive season sales on account of Diwali in November along with the rollout of new technological systems of e-invoicing and action against tax evaders.

  • The proposed extension of electronic invoicing to all businesses will further prevent leakages in GST revenues.


New measures to tackle evasion

  • Under GST laws, e-invoice for B2B transactions has been made mandatory for companies with turnover of over Rs 500 crore from October 1 last year.

  • It was notified to be extended to businesses with over Rs 100 crore turnover from January 1 this year and is likely to be extended for all businesses beginning April 1.

  • E-invoicing system is connected to a central portal that receives and validates invoices in real-time and over time will eventually replace the e-way bill system. It has been seen as a major game-changer to curb tax evasion and plug leakages.


Base effect

  • The base effect is the distortion in a monthly inflation figure that results from abnormally high or low levels of inflation in the year-ago month.

  • A base effect can make it difficult to accurately assess inflation levels over time. It diminishes over time if inflation levels are relatively constant.

  • The causes of base effects are varied and range from seasonal variations to changes in demand. From a technical perspective, base effect impact the overall inflation figure.