NEW DELHI: Senior Congress leader and MP Jairam Ramesh has expressed concern over the slowdown in Goods and Services Tax (GST) collections, as revealed by December 2024 data.
Ramesh highlighted, “Recent data from December 2024 reveals that last month’s GST collection grew at the second slowest pace in three and a half years. After refund adjustments, the net GST collection growth fell to 3.3%, the lowest in FY 2025. This is alarming on several fronts.”
Ramesh outlined several issues contributing to the slowdown and criticized the government’s economic management, stating that this decline could have far-reaching consequences.
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“Firstly, during the first three quarters of the current financial year, the government recorded an 8.6% growth in GST collections, falling short of the budgeted target of 11%. This revenue shortfall cannot be an excuse for the government to further cut social welfare programs like MGNREGA, especially when rural wages remain stagnant and consumption has declined. Instead, government spending should be used as a stimulus for the economy.”
Ramesh pointed out that a 45.3% rise in taxpayer refunds last month has contributed to the dip in net GST collections. “A significant portion of these refunds is suspected to be fraudulent. Due to the complexities of the GST system—exacerbated by flawed software systems—there is significant scope for large-scale fraud. Input Tax Credit (ITC) fraud is particularly rampant. Among frauds worth over ₹35,132 crores identified, the recovery rate is just 12%. Weak supply chain tracking allows buyers to claim ITC without receiving actual supplies, often using fake invoices or inflated turnovers to claim fraudulent refunds,” he said.
The Congress leader linked the GST slowdown to broader economic challenges. He cited the July-September 2024 GDP growth rate, which fell to 5.4%, matching the weak private investment growth during the same period.
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“Consumption growth has stagnated, and rural wages have remained stagnant for over a decade amid rising inflation and unemployment,” Ramesh noted.
He warned that India is caught in a “vicious cycle of low consumption, low investment, low growth, and low wages,” and called for urgent policy interventions.
Ramesh urged the government to focus on structural economic reforms instead of targeting trivial issues like taxing popcorn. He suggested that the upcoming Union Budget must provide income support to the poor and tax relief to the middle class.
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Highlighting the Congress’s vision, he proposed a “GST 2.0,” which would simplify tax procedures and address the systemic inefficiencies plaguing the current system.
“A revamped GST 2.0—one that is truly good and simple, as envisioned by the Indian National Congress in its manifesto for the 2024 Lok Sabha elections—must be implemented. The terror of tax and investigative agencies, which is stifling private investment and forcing entrepreneurs to flee abroad, must come to an end,” he said.
He also demanded an end to the “tax and investigation agency terrorism” that, he claimed, deters private investment and drives entrepreneurs abroad.
