India’s Goods and Services Tax (GST) collections in December 2025 point to a gradual stabilisation in revenue momentum after the sharp GST 2.0 rate rationalisation implemented in September, offering reassurance that tax buoyancy is holding up even as effective rates are lower.
Gross GST collections for December stood at ₹1,74,550 crore (excluding compensation cess), registering a 2.51% rise over November. On a year-on-year basis, however, December collections show a marginal decline of 1.3%. Experts note this drop is because the collection number for the year-ago period includes ₹12,301 crores in compensation cess.
In December 2024, gross GST collections were ₹1,76,857 crore, including this compensation cess. Adjusting for this, December 2025 collections are 6.07% higher year-on-year. Experts see this rise as a signal that GST revenues have begun to find their footing after the slab changes and rate cuts.
Post-Rationalisation Reality Check
Tax experts say the December numbers must be read in the context of a structural transition underway within the GST framework. “Despite the steep cut in GST rates earlier this year, a growth of around 6 percent in gross monthly collection is encouraging,” said Pratik Jain, Partner at Price Waterhouse & Co LLP.
“That said, the growth is largely attributable to imports. If this momentum continues for the remaining months of the fiscal, a year-on-year growth of around 9% still appears achievable, which may also be the government’s implicit target,” he added.
Imports Drive the Headline Numbers
A key driver of December’s performance was import-related Integrated GST (IGST), which rose sharply by nearly 19.7% year-on-year. Manoj Mishra, Partner and Tax Controversy Management Leader at Grant Thornton Bharat said, “Import-related IGST growth of nearly 20 percent points to resilient supply chains and manufacturing momentum, while steady domestic collections reflect stable consumption.”
Mishra added that the data comes at a time when India has consolidated its position as the world’s fourth-largest economy, overtaking Japan.
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However, some experts have cautioned that import-led growth warrants closer scrutiny. Saurabh Agarwal, Tax Partner at EY India, noted that while higher import GST collections support revenues, they also raise questions in the context of the Atmanirbhar Bharat push. “The uptick in GST collections on imports is notable, though it does not fully align with the self-reliance narrative. That said, the increase in domestic GST refunds is a welcome signal of the government’s intent to ease working capital pressures for businesses,” he said.
Domestic Collections Steady, Volume Growth Takes Over
Domestic GST revenues remained largely stable in December, reflecting subdued year-on-year growth but improving month-on-month momentum. Experts say this underlines a shift from rate-led to volume-led growth.
Mahesh Jaising, Partner & Indirect Tax Leader at Deloitte India, said the data points to underlying demand resilience. “Growth has been broad-based, with domestic revenues holding steady and import-related GST showing a strong rebound,” he said.
Cumulatively, gross GST collections for April–December have grown 8.6%, reinforcing the structural strength of the tax base even after the rate rationalisation exercise.
MS Mani, Partner at Deloitte India points out that this moderation in growth was expected given the sharp reduction in GST rates starting September 22. “While the strong growth seen in the first half of FY26 has tapered, gross collection growth of 6.1% on a year-on-year basis and 8.6% on a cumulative basis indicates that consumption is on the upswing. Volume growth in many businesses is compensating for the lower rates,” he said.
Mani also emphasises that gross collections provide a clearer signal than net collections. “Refunds during a month are not necessarily linked to economic activity in that period. As such, gross GST collections are a more reliable indicator of consumption trends than net collections,” he added.
Refund Surge Reflects Policy Shift
December also saw a sharp spike in GST refunds, which rose nearly 31% year-on-year to ₹28,980 crore, significantly impacting net GST collections.
According to Vivek Jalan, Partner at Tax Connect Advisory Services, the decline in net domestic GST revenues (down 5.1% year-on-year) can be explained by policy-driven factors rather than a slowdown in consumption.
“The GDP growth crossing 8% and net GST domestic revenues degrowing may appear contradictory, but GDP growth has been driven largely by government expenditure. The consumption impact of this spending will be visible over the next six to twelve months,” Jalan said.
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He added that GST 2.0 rate cuts have created or deepened inverted duty structures in sectors such as packaging, farming and pharmaceuticals. “Taxpayers applied for inverted duty refunds in November, many of which were processed in December, further pulling down net GST collections,” Jalan explained.
State-Level Trends Remain Uneven
While overall collections show stabilisation, state-wise GST performance remains mixed. Seventeen states, including Delhi, Bihar, Madhya Pradesh, Telangana and Tamil Nadu, recorded a slowdown in revenues.
“Several large states such as Maharashtra, Karnataka, Andhra Pradesh and Haryana have reported low single-digit growth, while only a few states have seen strong positive growth compared to earlier in the fiscal,” MS Mani said, flagging regional divergence as an emerging concern.
At the same time, Saurabh Agarwal pointed to robust performance in regions such as Odisha and the North East as indicating deeper penetration of formal economic activity and consumption beyond traditional hubs.
“In a landscape shaped by structural transitions, we are observing a period of deliberate calibration in revenue. The current moderation in domestic GST collections growth aligns with expectations following the government’s GST rate rationalisation—a move prioritising long-term tax harmony over immediate gains. The robust performance in regions like the Northeast and Odisha highlights a deepening of consumption and increased development in these regions. While weather patterns suggest a muted outlook for the immediate month, the underlying trajectory remains focused on resilient, inclusive growth,” he said.
GST 2.0: From Neutrality to Growth Enablement
Despite the short-term moderation in some aspects of the collections, experts broadly agree that December’s data strengthens the case for GST 2.0 reforms.
Abhishek Jain, Partner and National Head of Indirect Tax at KPMG said the post-rationalisation performance validates the government’s strategy. “The 6.1% rise in GST collections post rate rationalisation is a strong validation of simplifying the tax structure. By improving compliance through technology, GST is moving from a revenue-neutral framework to a growth-enabling tax system,” he said.
Manoj Mishra added that as Budget 2026–27 approaches, the focus is likely to remain on GST 2.0 reforms to sustain growth without compromising revenue certainty. These include automation of compliance, reduction of unwarranted litigation, and a calibrated credit framework.
Outlook: Gradual Recovery Ahead
While December’s numbers do not signal a sharp rebound, they suggest that the worst impact of rate cuts may be coming to an end. Experts expect GST collections to strengthen gradually as the benefits of lower rates, improved liquidity through faster refunds, and higher government spending begin to feed into consumption.
As Vivek Jalan summed up, “The real boost to GST collections from higher government expenditure will be seen in FY26–27. When that happens, GST revenues should revive with a bang.”
