GST Collection Declines in 20 Out of 36 States/UTs in October

GST Collection Declines in 20 Out of 36 States/UTs in October

Issue: To analyze the detailed state-wise Goods and Services Tax (GST) collection data for October 2025, revealing a decline in revenue for a majority of states and Union Territories following the GST rate rationalization (GST 2.0).

Facts:

• The GST rate cuts (GST 2.0) became effective in the last week of September 2025.
• The GST collection data for October 2025 reflects business transactions conducted in September 2025.
• The overall collection growth from domestic sources was a modest 2%.

Decision:

Data from the GST Portal showed that 20 out of the 36 States and Union Territories registered a decline in Goods & Services Tax (GST) collection in October, with some recording de-growth of up to 24% compared to last October.

Key TakeDowns:

• Majority Decline: More than half of the states and UTs experienced a drop in GST revenue. Puducherry recorded the maximum decline at 24%.
• Key States Affected: Major states/UTs that saw a decline included Delhi, West Bengal, and Rajasthan. Other states included Madhya Pradesh, Andhra Pradesh, and Kerala.
• Reasons for Decline: The decline is attributed to two factors:
  1. Muted Demand: Consumers postponed some discretionary purchases in early September, awaiting the price reduction due to rate cuts.
  2. Rate Cut Impact: The rate reductions themselves immediately impacted the overall collections, despite the likelihood of actual buying showing an uptick in volume.
• Long-Term Optimism: Despite the October dip, analysts (like those at SBI) project that overall collection momentum will likely improve in November and that GST revenue for FY26 will still be higher than budget estimates, confirming that big states are still in the positive zone.