The GST collections stood at ₹1,73,240 crore, marking a two-month low and the second-lowest monthly mop-up so far in FY25. However, GST collections for April-September FY25 are still 9.5% higher than in the same period last year. So far in FY25, total GST collections account for 53% of total FY24 collections.
When considering net collections—arrived at after adjusting for refunds—these were just 3.9% higher than a year ago.
State-wise performance revealed that seven states recorded negative revenue growth, with the highest contraction seen in Manipur at 33%.
Ten other states, including Telangana (1%), Rajasthan (2%), Uttar Pradesh (3%), and Tamil Nadu, Maharashtra, and West Bengal (5% each), reported growth below the national average of 6%.
Conversely, Haryana recorded the highest revenue rise at 24%, followed by Delhi at 20%. The GST collections announced for September are based on business activities undertaken in August and reported in September.
Experts view the trend with caution.
“While collections for this month haven’t shown significant increases, it is anticipated that next month’s collections should see a significant boost due to the upcoming festive season,” said Saurabh Agarwal, Tax Partner at EY. He added that the significant increase in GST refunds for exports suggests a substantial rise in exports from India and that the overall increase in GST refunds demonstrates the government’s commitment to timely releasing funds to support working capital for exporters and industries facing inverted duty structures. The growth in collections in Ladakh, Puducherry, and Andaman indicates comprehensive development across the country.
Moore Singhi Executive Director Rajat Mohan echoed similar sentiments: “The significant divergence between the double-digit growth in GST refunds (24.3% in September 2024) and the single-digit growth in overall revenue (6.5%) suggests a complex fiscal dynamic. This sharp increase in refunds, particularly for exports, may indicate improvements in compliance, faster processing times, and rising export activity, which is positive for economic competitiveness. However, it poses a challenge to revenue retention, as higher refund outflows limit net revenue growth, which only rose by 3.9%. This trend could signal the need for policy adjustments to balance refund efficiency with revenue stability, as the widening gap may strain government fiscal resources over time.”
Experts also suggest that poor collections at a time when the GST Council is considering rate rationalisation may necessitate proper policy action to mitigate the impact on the economy and the public.
Pratik Jain, Partner at PwC India, noted, “While year-to-date GST revenues (September 2024) have still grown by over 9%, the monthly growth is perhaps less than expected. This may need a closer look by the GST Council, particularly in light of the rate rationalization exercise. However, with the festive season approaching, collections for the next couple of months might improve.”
Abhishek Jain, Indirect Tax Head & Partner at KPMG, remarked, “The GST collections seem to have stabilized around ₹1.75 lakh crore now. With the kick-off to festivities, the next few months are expected to witness a further surge. It is also encouraging to see a significant surge in processing of GST refunds this month.”
Experts believe that the decline in collections may correct itself with the onset of the festival season.
MS Mani, Partner at Deloitte India, stated, “While the GST revenues for the month may be a little underwhelming, considering that these collections relate to supplies in August—typically the beginning of the festive season buying spree—resulting in increased revenues, the upcoming months’ GST revenues will be eagerly watched as they are also a proxy for economic growth and can be correlated with GDP numbers. However, the significant increase in GST refunds, especially IGST export refunds, depicts the efforts of tax authorities to expedite refunds and policymakers to simplify the refund process. The tepid single-digit growth in GST revenues in many of the large states should hopefully correct in the coming months.”
Mahesh Jaising, Partner and Leader of Indirect Tax at Deloitte India, concluded, “The September 2024 GST collections reflect the resilience and robustness of India’s tax framework, with a healthy 6.5% year-on-year growth. This sustained increase highlights the effectiveness of ongoing reforms and compliance measures. Notably, the significant 31% year-on-year rise in GST refunds underscores the government’s focus on enhancing ease of doing business, facilitating timely refunds, and reducing working capital pressures for businesses. The continued momentum in both import and domestic collections reaffirms the strength of the underlying economy. The upcoming GST Council meeting in November will be pivotal in further rationalizing the tax structure and addressing industry-specific concerns, particularly around trade facilitation. The government’s sustained efforts in ensuring a stable revenue trajectory are commendable, contributing to long-term economic resilience and growth.”
It remains to be seen how policymakers at the GST Council interpret this decline in collections and what corrective measures they will implement to improve revenues without burdening the public.