GST Collections Rise 9.1% to ₹1.89 Lakh Crore in September

Goods and Services Tax (GST) collections in September climbed to ₹1.89 lakh crore, marking a 9.1 percent increase compared to the same month last year. The figures, released by the government on October 1, highlight that collections have remained above the ₹1.8 lakh crore mark for the ninth consecutive month, reinforcing steady momentum in tax inflows.

The September collection is notable not only for its year-on-year rise but also because it represents the fastest pace of growth in four months. In August, GST revenue growth was limited to 6.5 percent, making the latest number a clear pickup in tax inflows and compliance.

Resilience Despite Rate Cuts

The September gains come even as consumer spending on non-durable goods remained subdued, largely because buyers held back purchases in anticipation of GST rate cuts. From September 22, a new two-rate structure came into effect. Under this revised framework, the earlier 28 percent and 12 percent tax slabs were consolidated into 18 percent and 5 percent. As a result, more than 90 percent of goods shifted into the lower bracket.

Despite these structural changes and cautious consumer behavior, the tax inflows managed to show robust growth, indicating resilience in compliance and overall economic activity.

Expert View on Collections

According to MS Mani, Partner at Deloitte India, the rise in gross GST collections to ₹1.89 lakh crore for September suggests that there has been no significant slowdown in economic activity even though there were expectations of reduced consumer spending during August and September. He observed that the numbers highlight the stability of inflows despite adjustments linked to the new rate cuts.

This perspective underscores that the Indian economy continues to sustain high tax revenues despite consumption-related headwinds, showing that both compliance and underlying activity remain intact.

Also Read: Govt Approves 3% Dearness Allowance Hike, Arrears to Be Paid in October

GST Collections Trend

The latest data also extends the trend of strong GST inflows. Collections have now remained above ₹1.8 lakh crore for nine straight months, a sign of sustained efficiency in tax administration and relatively stable consumption trends.

However, while September revenues are solid, they remain below the record high of ₹2.4 lakh crore collected in April. This peak was partly seasonal but also reflected high levels of compliance and stronger demand in the earlier months of the financial year.

Effect of Rate Cuts

The September GST numbers also need to be viewed in the context of the structural rate changes implemented during the month. The consolidation of slabs was one of the most significant reforms in recent times, reducing the number of rates and bringing more than 90 percent of goods under the lower 5 percent and 18 percent brackets.

While these changes are expected to benefit consumers in the long term and potentially boost demand, they could weigh on tax collections in the immediate term. Analysts note that collections may remain subdued for some time as the lower rates take effect, but compliance and volume growth are likely to restore momentum in the medium term.

RBI’s Growth Outlook

The Reserve Bank of India (RBI), in its latest review, revised India’s growth forecast upward to 6.8 percent for the year, compared with 6.5 percent projected earlier. The central bank expects the GST rate cuts to help support economic growth by boosting consumption and providing a cushion against external pressures such as US tariffs.

The RBI’s revision reflects optimism that the benefits of lower GST rates will offset short-term softness in collections, while also supporting consumer demand and business activity.

Global Agencies’ Views

International rating agencies have also weighed in on India’s growth outlook. S&P Global Ratings, earlier in the month, maintained its projection that India’s economy will grow at 6.5 percent. The agency noted that while global headwinds such as US tariffs remain a challenge, strong domestic demand will play a critical role in cushioning the economy against external shocks.

This alignment between domestic and global institutions highlights confidence that India’s internal demand base and supportive fiscal measures will sustain growth momentum despite global uncertainties.

September Collections in Perspective

The September collection of ₹1.89 lakh crore, while strong, is part of a broader trend that shows both consistency and some cyclical fluctuations. The nine-month streak of revenues above ₹1.8 lakh crore demonstrates stability, but the dip from April’s peak suggests that collections are influenced by seasonal factors as well as structural changes like rate revisions.

The consolidation of tax slabs, while beneficial for simplifying the GST framework and reducing the burden on consumers, is expected to temporarily weigh on revenues. However, as compliance improves and consumption demand gradually recovers under the new rates, collections are projected to strengthen again.

Compliance and Economic Activity

One of the key takeaways from the September data is that compliance remains high. Despite subdued demand for some categories of goods, collections continued to expand. This reflects the role of better tax administration and enforcement mechanisms in ensuring that revenues remain stable.

It also reinforces the point that India’s economic activity has not slowed significantly in response to recent rate changes. Businesses and consumers are adapting to the revised tax structure, and revenues have not suffered the sharp decline that some had feared when rate cuts were announced.

Future Outlook for GST Revenues

Looking ahead, collections may experience some softness in the immediate months as the impact of lower tax rates filters through. However, as the economy adapts and benefits from the revised structure, compliance and demand are expected to drive collections back to higher levels.

Industry experts believe that with effective monitoring and continued focus on compliance, GST collections will remain robust and may once again touch record levels in the coming quarters. The combination of lower rates, higher compliance, and resilient demand creates a foundation for stable revenues despite global challenges.

Conclusion

The GST collections for September highlight both resilience and transition. At ₹1.89 lakh crore, revenues grew 9.1 percent year-on-year, the fastest pace in four months, and remained above ₹1.8 lakh crore for the ninth consecutive month. This comes despite subdued consumer spending and the rollout of a significant structural reform in the form of new tax slabs.

Expert commentary suggests that the steady revenue flow is evidence of sustained economic activity and compliance. While collections are below April’s record high, the broader trend reflects stability. With the Reserve Bank of India revising growth forecasts upward to 6.8 percent and global agencies projecting strong domestic demand, the outlook for India’s economy and GST revenues remains positive.

As the effects of the new two-rate GST structure play out, collections may moderate in the short term but are expected to recover with stronger compliance and demand growth. The September numbers provide reassurance that India’s tax revenues remain on a solid footing even during periods of structural transition.

Click here to explore:

FII DII Data
IPO
BSE Sensex