Mop-up at Rs 1.70 lakh crore: Gross GST collections flat in Nov; taxable value of supplies up by 15% in Sept-Oct

Government officials said that they are optimistic about the consumption uplift seen after GST 2.0, with the taxable value of all supplies under GST having grown by 15 per cent during the two-month period of September-October versus 8.6 per cent growth in the same period last year. “This surge in taxable value demonstrates strong consumption uplift, stimulated by reduced rates and improved compliance behaviour,” an official said, adding that reducing tax on essentials and mass-use items would create a Laffer Curve-type demand uplift. As per the Laffer curve, revenues increase as tax rates rise till a certain point, but then increasing the tax rates beyond that point leads to a fall in government tax revenues.

Gross domestic GST collections fell 2.3 per cent to Rs 1.24 lakh crore, while mop-up from imports was up 10.2 per cent to Rs 45,976 crore.

GST compensation cess collections were sharply lower in November as the basket of items which attracted the cess over and above the 28 per cent rate before GST 2.0 – such as cars, white goods, and demerit goods – reduced as the cess was retained only for pan masala, tobacco, and related products after September 22 till the repayment of back-to-back loans for states’ compensation during the pandemic.

Cess collections, in gross terms, stood at Rs 4,756 crore, nearly one-third of the Rs 13,253 crore collected in November 2024. On a net basis, cess collections in November were Rs 4,006 crore, down 69.1 per cent from Rs 12,950 crore a year ago.

MS Mani, Partner, Deloitte India, said while the GST collections were expected to moderate due to the steep rate cuts across the board, there was an expectation of a consumption boost on account of these rate cuts. “…it is essential to note that the 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 have been compensated by higher consumption, although not at the expected scale. While the GDP data indicates robust growth, the GST collections over the next four months would indicate whether the FY26 fiscal targets can be met as planned,” he said.

Pratik Jain, Partner, Price Waterhouse & Co LLP, said, “GST collection for November is only marginally higher than last year. It was expected as this reflects a full month’s (i.e October 25) impact of GST 2.0 rate cuts. With steady increase in demand, the collection should progressively become better in the next few months.”

Officials said tax collection has especially been strong in sectors where rate rationalisation was implemented, such as fast-moving consumer goods, pharma, food products, automobiles, and medical devices among others. “In these sectors, the taxable value of supplies has seen significantly higher growth, confirming that lower GST rates translated directly into higher consumer spending. This growth is in value terms. Since GST rates were lower, the growth in volume terms will be even higher,” the official said.

Sector-wise data showed that the taxable value of supplies for cement, glass, ceramic, and stone products rose 19 per cent year-on-year in September-October compared with 2 per cent during the same period in 2024. For two-wheelers and bicycles, it grew 18 per cent in September-October versus 23 per cent last year, possibly a sign of consumer preference shifting toward more affordable four-wheelers, officials said. For buses and passenger cars, the taxable value of supply rose by 20 per cent in September-October, up from 12 per cent last year, while for pharmaceutical products it rose to 13 per cent from 5 per cent. The leather industry’s growth rose to 18 per cent from 9 per cent. Fabric and apparels under textiles, however, recorded 8 per cent growth compared with 12 per cent last year, which officials said could be reflective of the global trade situation in the aftermath of the US tariffs.

Post-September 22, as part of GST 2.0, the rate structure was streamlined to just two tax slabs of 5 per cent and 18 per cent, along with a special 40 per cent rate for luxury goods, from a four-slab structure of 5 per cent, 12 per cent, 18 per cent and 28 per cent earlier. Items in the 28 per cent slab were shifted either to 18 per cent (white goods like air conditioners, washing machines and small cars) or moved up to 40 per cent, with cess being retained only for pan masala, tobacco and related products. The central government on Monday introduced two legislative bills in Lok Sabha to bring in higher excise levy on tobacco and related products, and a new cess called ‘Health Security se National Security Cess’ on pan masala, as the compensation cess levied under GST is set to end.