GDP Projections for FY 2024 & Revised Growth Estimates: Government is expecting a growth of more than 6.5% in GDP for FY 2024 on the back of continued growth momentum in second half of the fiscal –tax buoyancy is close to two. Indian economy grew faster in manufacturing sector @ 13.9% in July- September, 2023. However, in agriculture and services, it was slow. Growth was 7.7% in first half of 2023-24 due to slowing global economy. GDP rose 7.6% in July- September 2023, thus beating the estimates. Not only this, India’s core sector output rose to 12.1% in October, 23. Now FY 2024 growth estimates are being up-scaled. Morgan Stanly now suggests 6.9% for financial year 2024. Kotak Mahindra Bank has revised it to 6.8% Nomura to 6.7 and Barclays to 6.7% – up by 3-9 basis points. All this is going to translate in higher tax revenues- both direct and indirect. GDP growth displays resilience and strength of the economy during testing times globally.

Possible Changes in CGST Act: Parliament’s winter session may have a bill to make changes in CGST Act based on recommendations of GST Council’s 52nd meeting held in October, 2023.

Legal Ruling on GST Classification: Madras High Court in a case (Parle Agro) has held that GST Council can not decide upon classification of goods with reference to flavoured milk. It also held that classification adopted under erstwhile central excise regime is not relevant for determining correct classification under the present GST regime.

CBIC Instructions: CBIC has issued instructions in relation to serving of notice in Form GST – DRC -01 and uploading of summary of order in Form GST DRC-07 electronically as the portal by the proper officer. GSTN has enabled a mechanism to file appeal under Amnesty Scheme on its portal. This is likely to facilitate those taxpayers to file appeal within stipulated time till 31st January, 2024 who could not file the appeal in past till 31st March, 2023.

Amnesty Scheme and Faceless Assessment: Also, faceless assessment under GST scrutiny may take place after some time and not immediately. This is so because GST assessments are linked to a particular jurisdictional officer or field formation or unit. Changes are required at policy level as well as to enable shift in jurisdictional officer.

Economy & GST Collection

Tax Receipts Decline in October: It has been reported that collections from major central taxes corporation, central goods and services tax (CGST), excise duty and customs duty before devolution to the states declined in October this financial year, leading to the total tax receipts dropping by 1.2 percent at Rs. 2.15 trillion compared to Rs. 2.18 trillion in the corresponding month of 2022-2023.

Record GST Collection in November: GST collection in November, 2023 has surged by 15% on YoY basis to Rs. 1.68 lakh crore (Rs. 1.68 trillion) which is the steepest growth rate so far. The gross GST revenue collected in November, 2023 is Rs.1,67,929 crore out of which CGST is Rs.30,420 crore, SGST is Rs.38,226 crore, IGST is Rs.87,009 crore (including Rs.39,198 crore collected on import of goods) and cess is Rs.12,274 crore (including Rs. 1,036 crore collected on import of goods). This growth could be attributed to strong festive sentiment, rise in consumption, import of services, cricket world cup event, automobile sector etc.

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February 2024