Indeed, the collections in April were the highest since the implementation of the indirect tax regime in 2017. But it's important to remember that the April data is for transactions that took place in March, which usually benefit from high year-end economic activity and compliance-related measures. This spike tends to be short-lived, and collections in the rest of the year tend to be sharply lower.

In FY23, after hitting ₹1.68 trillion in April, the GST mop-up remained in the ₹1.4-1.5 trillion range, and was ₹1.6 trillion in March 2023. In FY24, after hitting ₹1.87 trillion in April, the collections averaged ₹1.66 trillion in the rest of the 11 months, with a high of ₹1.78 trillion in March 2024.

A better metric is year-on-year growth, which was 12.4%, better than the 11.5% growth in March 2024.

How have collections grown in the last few years?

They have been robust, rising as much as 30% in FY22, 21% in FY23 and 12% in FY24. Much of the rise in FY22 and FY23 was due to high inflation and a low base effect, given the drop during the pandemic. Nevertheless, the rise in collections outpaced nominal GDP growth in both those years. This momentum slowed down in FY24, and the growth was only marginally better than the 9% nominal GDP growth estimated for the year.

GST collections are measured at current prices, which include the impact of inflation. Retail inflation in FY24 was 5.4%, down from 6.7% in FY23. Wholesale prices declined by 0.7% in FY24, following a 9.4% inflation in FY23. This has been one reason behind the slowdown in the momentum of GST collections.