However, the net GST revenue — after accounting for refunds — grew marginally by 0.6% YoY to ₹1,69,002 crore, as refund outflows surged 55.3%, reflecting higher export incentives and credit settlements across manufacturing-heavy sectors.
Imports power ahead; domestic consumption shows softness
A major driver of revenue growth was the 12.8% increase in GST collected on imports, helped by a robust pickup in:
Electronics and high-value consumer goods,
Capital machinery for manufacturing expansion
Early festive season stocking
In contrast, GST from domestic transactions was up just 2% YoY, signalling that mass-market consumption remains uneven, particularly in rural pockets and discretionary spending categories.
Economists say these point to a demand divergence — resilience at the premium end, cautiousness among middle-income consumers. Abhishek Jain, Indirect Tax Head & Partner, KPMG said, “The higher gross GST collections reflect a strong festive season, higher demand and a rate structure that has been well absorbed by businesses. It is a positive indicator of how both consumption and compliance are moving in the right direction.”
Also Read: New GST registration system from Nov: What will change for small businesses
Similarly, Saurabh Agarwal, Tax Partner, EY, said, “The GST collections, while aligning with immediate expectations, reflect a muted momentum in September primarily due to the rate rationalisation effect in the majority part of September and the deferred consumer spending ahead of the upcoming festive season. This anticipated lag is likely to be compensated for by more robust numbers in the next month, driven by seasonal buoyancy.
Crucially, the government’s unwavering commitment to resolve working capital issues for exporters and address concerns around the inverted duty structure is a significant positive development. This certainty in the tax regime and reduction of working capital leakages are vital confidence boosters for the investor community, reinforcing the ease of doing business.”
Furthermore, the impressive, high percentage growth in collections from state/ UTs like Arunachal Pradesh, Nagaland, Lakshadweep, and Ladakh is a tangible indicator of holistic economic development and deepening formalisation across India. This broad-based growth signals a stronger, more integrated national economy and affirms the systemic success of the GST framework, added Agarwal.
Year-to-Date Gains Remain Strong
For FY26 so far (April–October 2025), GST collections total — ₹13.98 lakh crore — a steady 9% increase YoY. This demonstrates structural revenue buoyancy supported by digital compliance enforcement and a widening tax base from small and mid-sized enterprises.
State-Wise Performance: Industrial Leaders Surge, Consumption States Lag
States with industrial corridors, export zones, and logistics hubs led the collection momentum:
States Showing Strong Growth YoY % Key Growth Drivers
Nagaland +46% Construction & infra-led economic revival
Gujarat +10% Ports, petro-chem, metals, export trade
Telangana +10% IT services + pharma supply chain
Karnataka +10% Electronics & digital services tax base
Punjab +8% Agri-trade, FMCG and logistics
Also Read: GST rate slab rejig: What likely will become cheaper and expensive
Maharashtra (+3%) and Tamil Nadu (flat) continued to anchor urban consumption, though at a moderated pace after last year’s high base effects. Meanwhile, several otherwise high-consumption states reported contraction: Delhi −6%, Rajasthan −3%, Kerala −2%, Tripura −6%, Arunachal −9%.
This reflects that there is an Urban mobility moderation, tourism volatility in coastal states, Mining slowdown impact and Household spending compression in mid-income segments.
Better Cash for States via IGST Settlement
To support state finances: ₹5,91,353 crore has been devolved from IGST as SGST portion till Oct 2025, which is a growth of 7% YoY. Pre-settlement SGST revenues at ₹3,20,425 crore, which is a growth of 9% YoY.
States like Gujarat, Karnataka, Telangana and Bihar have seen double-digit gains in IGST settlement support — expanding their spending capacity ahead of festive welfare disbursements.
So What Is the Data Saying?
A clear economic signal is emerging:
Trend Interpretation
Import-linked GST growth in double digits, investment + premium consumer space remains healthy
Domestic GST up only 2% Rural & mid-segment consumption still weak
Refund acceleration export push + improved input compliance
Regional divergence, industry-strong states outperform consumption-dependent ones
Looking Ahead
With November–December billing capturing the peak festive season, analysts expect: firstly, GST collections to climb back above ₹2 lakh crore, secondly, Stronger domestic demand revival signs.
Also Read: GST cuts, weather disruptions trigger a soft patch for FMCG ahead of festive rebound
And thirdly, Continued compliance-driven gains from tech-enabled enforcement. The next GST Council meeting is likely to debate rate rationalisation and compliance simplification, aided by the sustained revenue glide path.
Bottom Line
GST data for October reflects a stable revenue trajectory, powered by strong imports and industrial-state performance — but a sharper domestic demand recovery will be key to sustaining momentum into the second half of FY26.
