Goods and Services Tax (GST) collections for August, at Rs 1,43,612 crore, have dipped three per cent below the July collections of Rs 1,48,995 crore. In fact, the collections have been lowest over the past three months. However, it is a matter of respite that GST collections have remained over the 1.4 lakh mark for straight six months. With the onset of the festive season over the coming months, the collections are expected to witness an upward surge. However, at this juncture, as the compensation regime for states — provided under Goods and Services Tax (Compensation to States) Act, 2017 — has come to an end, parity among states should be a more concerning issue. Prior to that, it may also be important to understand what factors have contributed to the GST collection India has clocked in August. As a matter of fact, GST collections for August have spiked at 28 per cent on year-on-year basis i.e., an increase over August collections last year. The base effect is into play here as the economic scenario has changed a great deal since then. With economic activities moving towards normalization, impressive YoY improvement was more or less an expected outcome. Certainly, base effect is not the only contributor. High inflation may also be a factor behind improvement in collections over the last year. This may be a contested argument since inflation disincentivizes people from consuming many items. The third factor could be the rate hike decision taken at the 47th GST Council meeting in July this year. During the meeting, the council withdrew GST exemption from "pre-packaged and labelled" items. A broad range of daily use items including puffed rice, milk, curd, wheat flour etc. were brought under the purview of five-percent GST slab. This widening of the indirect tax net certainly added up to the government's coffer, at the expense of burdening the already struggling population. In a separate decision, GST rates were hiked for items like tetra pack, printing ink etc. The 47th GST council meeting was indeed a game-changing event for the government. Another major contributing factor, as claimed by the Finance Ministry, could be "better compliance" and "better reporting coupled with economic recovery." More importantly, GST collections from import of goods registered a 57 per cent growth while that from domestic transactions also witnessed a 19 per cent uptick. The growth in GST revenues, however, is not proportionate. While states like Mizoram and Goa clocked a whopping 78 per cent and 32 per cent growth, respectively, Telangana, Rajasthan, Assam and Uttar Pradesh could not even touch the 15 per cent mark. Most of the states fared well below the national average of 28 per cent. Until June this year, low-faring states had been managing their affairs with the compensation provided at the compounded rate of 14 per cent by the Centre under Goods and Services Tax (Compensation to States) Act, 2017 in case of losses. Now that this provision has crossed its time-period, and was not extended despite widespread demands, the states will have to find an alternative arrangement. In sum total, the marginal dip of three per cent below the July GST collections should not be a cause of concern; neither the 28 per cent spike on YoY basis should be seen as a reason for jubilation. However, the stability in collections over the past few months — arising from whatever reasons — is reassuring. Despite certain structural flaws, India's new indirect tax regime appears to be gaining a stable footing. ICRA's (Investment Information and Credit Rating Agency of India) Chief Economist Aditi Nayar has speculated that GST collections may remain well above 20 per cent in September and taper down to 12-15 per cent in Q3 of FY2023. These are good (if not great) signs in terms of revenues. However, overburdening of common masses and revenue disparity among states need to be addressed by the earliest.