GST collection growth mainly due to hike in input prices

The drastic increase in raw material prices seems to have contributed to the jump in Goods and Services Tax (GST) collections in October 2021 than the real growth in the economy, an official of Consortium of Indian Associations (CIA) said.

CIA Convenor K. Raghunathan also said the committee set up by the Tamil Nadu government for the revival of micro, small, and medium enterprises (MSME) should come out with its report at the earliest.

"The GST collections in Oct 2021 should not be compared with the collections during the corresponding period last year as the nation was under lockdown. Even comparing the GST collections logged in Oct 2019 with that of October 2021, there may be much to crow about," Raghunathan told IANS.

CIA is a consortium of about 70 industry bodies present across the country.


Raghunathan and another industrialist, not wanting to be identified, said there has been a huge increase in raw material prices during the last two years.

"In terms of the number of units produced, the quantum would be lower than the normal output. The hike in raw material prices is the reason for achieving high GST collections without any physical growth," the Coimbatore-based industrialist told IANS.

According to Raghunathan, the prices of steel, aluminium, and fuel have increased and so have the production costs.


He also said micro industries can file GST returns once in three months and the October 2021 remittance includes the three months collection of many under quarter units, which was not there in 2019.

Similarly, items like Covid-19 vaccine, personal protection equipment, sanitisers, and similar other items were not there in 2019, Raghunathan said.

Further the high exports due to half yearly closing and easing of container shortage in July and August also contributed to GST collections last month.


"So, if one factors the above, the GST collection last month, might even be lower than that of October 2019," Raghunathan added.

On Monday, the Central government said the gross GST revenue collected in the month of October 2021 stood at Rs. 130,127 crore, which is a growth of 24 per cent over the GST revenues in the same month last year and 36 per cent over 2019-20.

The revenue for October is also the second highest ever since the introduction of GST, second only to that in April 2021, which is related to year-end revenues - IANS