GST Collections See Year-Low Amid Tax Rate Reforms in India

India's GST collections hit a year-low of Rs 1.70 lakh crore in November, with a marginal growth due to tax rate reductions on goods and services. Despite the dip, increased consumption gives hope for a multiplier effect in the medium term, as stated by government sources.

India's Goods and Services Tax (GST) collections fell to a year-low of Rs 1.70 lakh crore in November, indicating a slight growth of 0.7 percent year-on-year after excluding cess proceeds from sin and luxury goods. Official data highlighted this trend on Monday.

This decline was attributed to a significant reduction in tax rates aimed at boosting domestic consumption. The government had previously reformed GST tax rates, consolidating them to two: 5 percent and 18 percent. A 40 percent rate applies to ultra-luxury items.

Despite these reductions leading to lower revenue, a spurt in consumption is evident, indicating a possible multiplier effect. Industry turnovers have risen, providing hope that the GST initiative will yield medium-term benefits, according to experts and government officials.

(With inputs from agencies.)