SBI Report: October GST Collections Defy Rate Rationalisation Fears

By | November 4, 2025
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SBI Report: October GST Collections Defy Rate Rationalisation Fears

 

Issue: To analyze the actual impact of the Goods and Services Tax (GST) rate rationalization (GST 2.0) on revenue collections, specifically addressing the widespread apprehension among state governments and economists about a massive decline in GST revenue post-rate cuts.

Facts:

  • GST rates were slashed on numerous items (GST 2.0), effective September 22, 2025.
  • Short-term annual GST losses from rate rationalization were estimated to range from ₹48,000 crore (Finance Ministry) up to ₹10 lakh crore.
  • The October 2025 GST collections (reflecting September transactions) were released.

Decision:

An SBI Research report, titled ‘The Loss That Never Was!’, concluded that the strong momentum in October GST collections defied fears of massive revenue losses post-rate rationalisation, with collections increasing despite the cuts.

Key TakeDowns:

  • Collection Figures: Gross GST collections in October 2025 (reflecting sales after the cut) rose 4.6% Year-on-Year (YoY) to ₹1.96 lakh crore.
  • Net Collections: After accounting for a sharp 39.6% rise in refunds, net collections stood at ₹1.69 lakh crore, registering a 0.6% YoY growth.
  • State Apprehensions Unfounded: SBI stated that apprehensions expressed by states about revenue decline proved unfounded. States like Karnataka (which anticipated a ₹7,083 crore monthly drop) actually gained 10%, while Telangana and Punjab also showed positive gains (around 10% and 4% respectively). Only a few states, like Jharkhand and Uttarakhand, saw minor declines. * Long-Term Projection: Based on the positive October trends, SBI Research projects that most states will emerge as Net Gainers for the entire fiscal year (FY26) post GST rationalization, confirming the overall stability of the tax base.
  • Historical Context: SBI noted that historical evidence from 2018 and 2019 rate cuts showed that initial dips were followed by sustained 5–6% growth, yielding substantial additional revenue annually, reinforcing the current positive trend.