India's GST collections look strong on the surface, but the underlying revenue growth has slowed considerably since last year's reforms, according to a new analysis by economists Arvind Subramanian, Josh Felman and Ritesh Anand, published by Business Today.
In the first quarter of FY27, headline GST revenue growth was 10.5%, but actual gross GST growth was only 1.5%, according to their calculations. In the second quarter, headline growth accelerated to 15%, while actual gross GST growth stood at 9.5% and actual net GST growth at 8.2%.
Headline vs underlying
The authors argue that headline collection numbers can obscure the underlying trend because some revenues have effectively been shifted between GST and other tax categories. The September 2025 GST reforms simplified the rate structure and reduced rates on several goods and services, but at the same time changed the treatment of some levies.
This "re-labelling" — particularly the treatment of compensation cess and additional excise duty — has made it harder to compare GST revenue across periods on a like-for-like basis, they argue. The authors therefore say the headline GST collection figure needs to be supplemented by measures of actual gross and net GST revenue.
The analysis also points to net GST revenue as a share of GDP, which declined to 5.7% in FY26, compared with around 6% in FY24 and FY25 and a pre-GST average of about 6.2%.
September numbers still strong
The latest monthly data presents a more positive picture in absolute terms. Gross GST collections increased 14.7% year-on-year to more than Rs 2.03 lakh crore in September, according to government data. Domestic collections rose 10.1% to around Rs 1.38 lakh crore, while revenue from imports jumped 26% to Rs 65,525 crore. After refunds, net collections increased 18.1% to more than Rs 1.76 lakh crore.
September was the third month in FY27 in which gross collections exceeded Rs 2 lakh crore. During April-September, gross collections rose 11.6% to more than Rs 12.46 lakh crore, while net collections increased 10.4% to over Rs 10.66 lakh crore.
The broader concern, the economists say, is whether GST collections can sustain the revenue buoyancy needed to support government finances and the Centre-state fiscal relationship — and the post-2025 data points to a considerably slower underlying trajectory than the headline numbers alone suggest.
Sources: Business Today — India's GST revenue growth has lost momentum
In the first quarter of FY27, headline GST revenue growth was 10.5%, but actual gross GST growth was only 1.5%, according to their calculations. In the second quarter, headline growth accelerated to 15%, while actual gross GST growth stood at 9.5% and actual net GST growth at 8.2%.
Headline vs underlying
The authors argue that headline collection numbers can obscure the underlying trend because some revenues have effectively been shifted between GST and other tax categories. The September 2025 GST reforms simplified the rate structure and reduced rates on several goods and services, but at the same time changed the treatment of some levies.
This "re-labelling" — particularly the treatment of compensation cess and additional excise duty — has made it harder to compare GST revenue across periods on a like-for-like basis, they argue. The authors therefore say the headline GST collection figure needs to be supplemented by measures of actual gross and net GST revenue.
The analysis also points to net GST revenue as a share of GDP, which declined to 5.7% in FY26, compared with around 6% in FY24 and FY25 and a pre-GST average of about 6.2%.
September numbers still strong
The latest monthly data presents a more positive picture in absolute terms. Gross GST collections increased 14.7% year-on-year to more than Rs 2.03 lakh crore in September, according to government data. Domestic collections rose 10.1% to around Rs 1.38 lakh crore, while revenue from imports jumped 26% to Rs 65,525 crore. After refunds, net collections increased 18.1% to more than Rs 1.76 lakh crore.
September was the third month in FY27 in which gross collections exceeded Rs 2 lakh crore. During April-September, gross collections rose 11.6% to more than Rs 12.46 lakh crore, while net collections increased 10.4% to over Rs 10.66 lakh crore.
The broader concern, the economists say, is whether GST collections can sustain the revenue buoyancy needed to support government finances and the Centre-state fiscal relationship — and the post-2025 data points to a considerably slower underlying trajectory than the headline numbers alone suggest.
Sources: Business Today — India's GST revenue growth has lost momentum
