November GST collections saw modest growth after a significant rate overhaul, with the government highlighting increased
consumption as a positive sign. While domestic revenue dipped slightly, import collections rose, and net collections
improved due to lower refunds. Officials expressed optimism that these trends indicate a sustainable reform with a
future multiplier effect.
NEW DELHI: Goods and services tax (GST) collection growth moderated in Nov, following a massive overhaul of the
structure, including rate reduction on 375 items, although govt asserted that it had helped boost consumption and the
mop-up trends were in line with its estimate. During Nov, based on transactions in Oct, collections (excluding cess)
went up 0.7% to Rs 1.7 lakh crore, as revenue from domestic sources fell 2.3% to Rs 1,24,300 crore. In contrast,
collections from imports were 10% higher at just under Rs 46,000 crore. On a net basis, collections swelled 1.3% to Rs
1,52,079 crore as refunds were 10% lower, with govt officials maintaining that refunds were not held back. “The intent
of rate rationalisation was to put more money into the hands of the people… The challenge was to ensure that it is
sustainable. The numbers give us optimism. The response that the economy has given in terms of higher taxable supply
value, which is a sign of consumption, gives us confidence that the GST reform can be sustained in the short term to
give a much bigger multiplier effect in the medium term,” an official said. While announcing the rate rationalisation
exercise, which kicked in from Sept 22, govt had indicated that there may be a “fiscal impact” in the short run, but
higher consumption will make up for it over the next few months. Officials cited data from returns filed by entities to
argue that the taxable value of goods and services, which is the turnover, had increased during Sept and Oct (see
graphic), suggesting a boost to domestic consumption, which will help make up for the impact on revenue. Experts too
concurred. “GST collection for Nov is only marginally higher than last year. It was expected as this reflects a full
month’s impact of GST 2.0 rate cuts. With steady increase in demand, the collection should progressively become better
in next few months,” said Pratik Jain, partner at Price Waterhouse & Co. “Gross GST collections (excluding cess) have
largely remained the same as the same month last year, indicating that the loss on account of rate reductions has been
compensated by higher consumption, although not at the expected scale. While the GDP data indicates a robust growth, the
GST collections over the next four months would indicate whether the FY26 fiscal targets can be met as planned,” added M
S Mani, partner at Deloitte India.