Goods and Services Tax (GST) collections for December rose to Rs 1.15 lakh crore, the highest ever since the implementation of the nationwide tax in July 2017.

The previous monthly GST collection record was just short of Rs 1.14 lakh crore in April 2019.

This is the fourth consecutive month this year that GST collections have outperformed comparable months from 2019, a clear sign of a strong recovery as the Indian economy slowly came out of its biggest ever contraction in the April-June quarter. However, a much lower contraction in July-September means that India is officially in a technical recession.

In a further sign of economic recovery, advance corporate tax collections for the October-December 2020 quarter were also higher than the same period last year, Moneycontrol had reported earlier.

Advance corporate tax collection in the October-December quarter of the current fiscal year rose 49 percent. However, the advance personal income tax for the third quarter dropped 5.6 percent year-on-year as the economy is trying to recover from the COVID-19 pandemic-induced recession.

With improved tax collections comes the question of whether this would help the government get a grip over its worrying revenue situation.

"... the overall tax collections for FY21 would also depend on sectors such as hospitality, mobility, aviation, recreation, entertainment, which continue to operate with certain restrictions. These sectors are also significant revenue and employment generators and have a multiplier effect on the GDP," said MS Mani, Senior Director, Deloitte India.

The gross tax revenue estimated in Budget 2020-21 stood at Rs 24.23 lakh crore, of which corporation tax was estimated to be Rs 6.81 lakh crore, income tax Rs 6.38 lakh crore, and GST Rs 6.90 lakh crore, among others.

According to government data released in November, fiscal deficit widened to Rs 9.53 lakh crore, which is nearly 120 percent of the annual budget estimate, at the end of October of the current financial year, mainly on account of poor revenue realisation.

The government received Rs 7.08 lakh crore - which is 31.54 percent of 2020-21 budget estimate of total receipts - up to October. It comprised Rs 5.76 lakh crore of tax revenue (net to the Centre), Rs 1.16 lakh crore of non-tax revenue, and Rs 16.4 lakh crore of non-debt capital receipts.

For this financial year, the government had pegged the fiscal deficit at Rs 7.96 lakh crore, or 3.5 percent, of the GDP in the budget which was presented by Finance Minister Nirmala Sitharaman in February 2020. These figures, however, may have to be revised significantly in view of the economic disruptions created by the outbreak of the coronavirus.