Festive Cheer vs. Fiscal Fear: Officials Anticipate GST Collection Slump Post-Rate Cut

The article details a paradox emerging after the GST rate rationalization: despite a surge in festive sales, tax officials fear a temporary slump in revenue collection due to the substantial reduction in GST rates on essential goods.

Key Points of Concern for Tax Officials

Anticipated Revenue Dip: Officials project a dip in GST collection figures for the months of September and October, despite initial reports indicating strong festive sales volumes. This expected slump is a direct outcome of the government’s rate rationalization, which slashed GST on numerous items from 18% and 12% to 5%.
The Paradox: While the rate cuts successfully stimulated demand and boosted consumer enthusiasm, the lower rates mean that the same volume of sales now yields significantly less tax revenue per transaction for the government.
Wider Fiscal Strategy: The government’s decision to cut rates, particularly on daily essentials and white goods, was a deliberate move to push consumption, making the short-term revenue dip a calculated trade-off for long-term economic growth.
Expected Rebound: Despite the immediate concern, officials anticipate that the high sales volume driven by the festive season and increased affordability should eventually lead to a strong rebound in collection figures over the medium term, compensating for the initial loss from the lower tax rates.

Source :- Times Of India