Growth in India’s net Goods and Services Tax (GST) revenues slowed sharply to 0.6 per cent year-on-year (Y-o-Y) in October — the lowest so far in FY26 — as businesses adjusted to recent rate cuts and the government processed higher refunds.
Despite the moderation, net GST collections remained strong at ₹1.69 trillion, making October the third-best month of FY26, after April and May. In October last year, the figure stood at ₹1.68 trillion, while on a month-on-month (M-o-M) basis, collections rose 5.4 per cent from ₹1.60 trillion in September.
Gross Collections Up 4.6%, Import-Linked GST Strong
Gross GST receipts for October stood at ₹1.96 trillion, up 4.6 per cent Y-o-Y, driven by strong import-linked collections which grew 12.8 per cent. Domestic GST revenues rose 2 per cent to ₹1.45 trillion.
In the first seven months of FY26, net GST revenues increased 7.1 per cent to ₹12.07 trillion, while gross collections grew 9 per cent to ₹13.89 trillion.
Tax experts said the slowdown reflects temporary recalibration by businesses following the GST rate rationalisation effective September 22, as October collections capture transactions undertaken in September.
“The GST collections, while aligning with immediate expectations, reflect a muted momentum due to the rate rationalisation effect and deferred consumer spending ahead of the festival season,” said Saurabh Agarwal, Tax Partner, EY India.
“This anticipated lag is likely to be compensated by more robust numbers next month, driven by seasonal buoyancy,” he added.
Refunds Surge Nearly 40%
GST refunds surged 39.6 per cent in October, as the government continued its push to ease working capital pressures on exporters and domestic firms.
Domestic refunds: up 26.5 per cent to ₹13,260 crore
Export refunds: up 55.3 per cent to ₹13,675 crore
“Consistent increase in GST refunds shows confidence of the tax administration that GST collections will remain on a positive trend,” said Pratik Jain, Partner, Price Waterhouse & Co LLP.
“Next month’s data — reflecting the full impact of GST rate cuts — will be keenly awaited,” he added.
Regional Performance Mixed
While smaller and emerging regions led growth — Arunachal Pradesh (44%), Nagaland (46%), Lakshadweep (39%), and Ladakh (39%) — several states witnessed declines.
Himachal Pradesh (-17%), Jharkhand (-15%), Uttarakhand (-13%), and Andhra Pradesh (-9%) recorded notable contractions.
“Several states have recorded negative growth compared with the same month last year,” noted M S Mani, Partner, Deloitte India.
“It is essential to analyse sectoral GST trends and develop a policy framework to help all states sustain revenue growth.”
Consumption and Compliance Remain Resilient
Experts said that despite the softer growth rate, higher gross GST collections and steady domestic demand underscore underlying economic strength.
“The higher collections reflect a strong festival season, higher demand, and a rate structure well absorbed by businesses,” said Abhishek Jain, Indirect Tax Head & Partner, KPMG India.
Mani added that the modest increase in revenues, despite rate cuts, indicates robust consumption — consistent with other economic indicators.
