GST Net Revenue Inches Up 0.6% in October; Refunds Jump Nearly 40%

GST Net Revenue Inches Up 0.6% in October; Refunds Jump Nearly 40%

Issue: To analyze the Goods and Services Tax (GST) revenue performance in October 2025, specifically tracking the impact of the recent GST rate rationalization (GST 2.0) on net collections and the quantum of refunds processed.

Facts:

• The GST rate rationalization, which reduced tax rates on numerous items, was effective from September 22.
• Gross GST collections in October stood at ₹1.96 trillion, a 4.6% increase year-on-year (Y-o-Y).
• Collections in October reflect transactions undertaken in September, capturing only a partial impact of the GST rate cuts.

Decision:

India’s net revenues from GST grew by a muted 0.6% Y-o-Y in October, the slowest so far in FY26. This soft growth was caused by the rate cut recalibration and was offset by a massive surge in refunds.

Key TakeDowns:

• Refunds Surge: GST refunds surged by 39.6% in October compared to the previous year.
  • Export Refunds Lead: Export refunds saw a particularly sharp jump of 55.3%, with domestic refunds rising 26.5%.
• Causes of Soft Net Growth: The minimal net growth is attributed to the rate cut-induced recalibration by businesses and the postponement of supplies in the lead-up to the GST 2.0 implementation.
• Absolute Collection Strong: Despite the slow growth rate, the absolute net collection amount remained strong at ₹1.69 trillion, making October the third-best month of FY26.
• Import vs Domestic: Growth was primarily supported by strong import-linked collections (12.8% growth), while domestic GST revenues rose by a slower 2%.
• Future Outlook: Tax experts anticipate more robust net collections in the next month, driven by seasonal buoyancy, as the full impact of the GST cuts is expected to be compensated by higher sales volumes. ***