India’s GST Collections Jump 4.6% in October to Rs.1.96 Lakh Crore, Reflecting Steady Economic Activity

India’s GST Collections Rise 4.6% in October to ₹1.96 Lakh Crore; Growth Slows to 52-Month Low

New Delhi, November 1, 2025:
India’s Goods and Services Tax (GST) collections rose to a five-month high of ₹1.96 lakh crore in October 2025, marking a 4.6 percent increase year-on-year, according to data released by the Finance Ministry. While revenue growth remains positive, this was the slowest pace in 52 months, reflecting the impact of recent tax rate rationalisations under the GST 2.0 framework.

Despite the slowdown, October maintained the trend of strong monthly inflows, becoming the tenth consecutive month in which collections surpassed the ₹1.8 lakh crore mark. The last time GST revenues crossed the ₹2 lakh crore milestone was in May 2025, when festive demand and strong compliance pushed receipts to record highs.

GST Collections Maintain Momentum Amid Policy Transition

October’s gross GST inflows of ₹1.96 lakh crore represented a monthly increase from ₹1.89 lakh crore in September, underscoring the system’s resilience even amid sweeping structural reforms.
However, the growth rate halved from 9.1 percent in September to 4.6 percent in October, largely due to transitional adjustments following the September 22 GST rate rationalisation, which saw the elimination of the 12% and 28% slabs and reclassification of 90 percent of goods into lower tax brackets.

Economists said the moderation in growth was expected. “The GST realignment temporarily disrupted invoicing cycles in late September, but the simplified tax structure will likely boost compliance and expand the base over the coming quarters,” said a Delhi-based tax expert.

Net GST Revenues and Refund Trends

According to the Finance Ministry, net GST collections — after adjusting for refunds — stood at ₹1.69 lakh crore, up 0.6 percent year-on-year.
While domestic revenues remained largely flat compared with October 2024, customs collections rose 2.5 percent to ₹37,210 crore, reflecting a gradual recovery in imports.

Refunds surged sharply, with the domestic segment witnessing a 26.5 percent increase, and the customs side seeing a 55.3 percent jump. This uptick in refunds, officials said, was due to the clearance of pending claims under the new digital verification system introduced in August.

Gross domestic GST revenues reached ₹1.45 lakh crore, up 2 percent from ₹1.42 lakh crore a year earlier, signalling that the domestic consumption base remains stable despite inflationary pressures and a gradual shift in spending patterns.

Also Read : Tata Extends Lead for Second Month, Outpaces Mahindra and Hyundai in October Retail Sales

GST 2.0: Impact of Rate Rationalisation

The government’s GST 2.0 initiative, announced in August by the Prime Minister, aimed to simplify the indirect tax structure and reduce the compliance burden for small and medium businesses.
By merging the 12% and 28% tax slabs, the reform effectively shifted 90% of taxable items into the 5% and 18% categories, improving price transparency and potentially boosting consumption in key sectors like automobiles, electronics, and packaged foods.

While short-term revenue growth has moderated, policymakers believe the rationalisation will widen the taxpayer base, enhance compliance, and support sustained revenue buoyancy in the medium term.
A senior Finance Ministry official said,

“The initial adjustment phase may reflect slower growth, but the simplified GST regime will strengthen collections by improving compliance and reducing disputes.”

Macroeconomic Outlook: RBI and IMF Maintain Optimism

The Reserve Bank of India (RBI) has maintained a positive outlook on India’s growth trajectory, citing the GST reforms as a key structural tailwind.
In its latest review, the central bank revised India’s GDP growth forecast upward to 6.8 percent for FY26, up from 6.5 percent projected earlier. The RBI expects GST rate cuts and stable inflation to fuel consumer demand in the upcoming quarters.

The International Monetary Fund (IMF) echoed a similar sentiment, revising its growth estimate for India to 6.6 percent, up from 6.4 percent, noting that fiscal reforms and resilient domestic demand would offset external headwinds such as the impact of US tariffs and geopolitical volatility.

“The steady rise in tax collections despite structural adjustments underscores the depth of India’s economic base,” the IMF said in its report, adding that India’s indirect tax reforms continue to be a model for emerging economies.

Experts See Temporary Slowdown Before Acceleration

Tax analysts believe the current moderation in GST growth is transitional rather than structural.
“GST collections are reflecting the lagged effect of recent rate cuts,” said Ritesh Mehta, an economist at a Mumbai-based policy think tank. “We expect a rebound in Q4 FY26 as festive demand carries forward, corporate capex picks up, and consumption benefits from reduced prices.”

Experts also noted that sectors such as automobiles, electronics, FMCG, and logistics are likely to drive the next phase of GST growth, supported by better compliance technology and data integration across state systems.

Looking Ahead: Structural Strength in Tax Compliance

With October marking ten straight months of collections above ₹1.8 lakh crore, India’s GST system continues to demonstrate its robust compliance network and administrative efficiency.
Even as growth temporarily moderates, fiscal stability remains intact, giving the government fiscal space to support infrastructure spending and social welfare programmes.

If the current momentum holds, economists expect FY26 GST revenues to surpass ₹23 lakh crore, setting a new benchmark for indirect tax collections in India.

Conclusion

October’s GST figures reflect a maturing tax ecosystem navigating a crucial reform phase. While growth slowed to its weakest pace in four years, the underlying revenue base remains strong. With rationalised rates, improved compliance, and rising domestic demand, India’s GST system is poised for a renewed acceleration in the months ahead.

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