.NEW DELHI: It was a year that was marked by the biggest reset since GST was launched nine years ago and marks a complete change in thinking within the policy dispensation, which had earlier focused on revenue neutral rates. Instead, six months after an overhaul of rates on nearly 400 items has shown that higher consumption has helped increase tax collection to an average Rs 1.1 lakh crore a month from Rs 1.01 lakh earlier, despite the average tax rate falling from 14.4% to 12.8%. The average monthly taxable supply is seen to be over 22% higher in the post rate rationalisation period, with the volume growing up to 60% in case of precious metals and 21% for vehicles and 16% (see graphic). The only sector where it shrunk was in the financial services spaces, driven by life and health insurance moving to 0% from 18% earlier.. Overall growth in B2C revenue is of the order of 21.6% in the post rationalisation phase, according to data sourced from finance ministry. “Consumption has truly shot up. Take household goods, vehicles or cement, everywhere, consumption is higher. It is also reflected in the GDP data. Spending is increasing across sectors that is why the base has gone up, compensating for rate rationalisation. That was a bet that the finance minister took and it is showing. It has acted as buffer during a period of uncertainty,” said MS Mani, partner at consulting firm Deloitte India. The rate rationalisation exercise moved from merely protecting revenue to lowering the burden for consumers, transitioning to two slabs of 5% and 18%, removing classification issues and disputes and boosting demand. The move also ended up silencing the critics of the tax reform – among the biggest initiatives of the Modi govt. “GST 2.0 and its rate rationalisation were a thoughtfully planned reform, designed to alleviate the tax burden, eliminate distortions, boost competitiveness and increase disposable income for consumers. Despite external pressures — like tensions in West Asia, rising oil prices, and currency volatility — India’s resilience was reinforced by GST 2.0, which played a pivotal role in supporting domestic consumption and stabilising the economy,” said Devesh Uniyal, partner and tax & finance consulting Leader at Grant Thornton Bharat. What the experts do not mention is that a lower tax regime has also helped check leakages as the incentive for cash payments has come down. Over the last nine years, GST has grown in size and scale. From 66.5 lakh registered taxpayers in 2017, the numbers has increased to 1.65 crore at the end of May. Collections have soared from Rs 7.4 lakh crore (JulyMarch) 2017-18, when it was implemented, to Rs 22.3 lakh crore last year.