Despite robust overall collections, India's Goods and Services Tax (GST) revenue growth has lost significant momentum since fiscal year 2023, according to an analysis by economists Arvind Subramanian, Josh Felman, and Abhishek Anand. Their findings suggest that the headline collection figures often reported do not fully reflect a sharp deceleration in underlying revenue growth, particularly following tax changes implemented in September 2025.
The economists highlight a critical distinction between headline GST revenue growth and 'actual' gross or net GST revenue growth. They argue that post-2025 reforms, which simplified rate structures and reclassified certain levies, have made direct year-on-year comparisons challenging and can inflate headline numbers.
Deceleration in Growth Metrics
The analysis reveals a marked slowdown across key metrics:
- Headline GST Growth: Fell from 21.9% in FY22-23 to 11.6% in FY23-24, 9.4% in FY24-25, and 7.5% in FY25-26.
- Actual Gross GST Growth: Stood at 5.8% in FY25-26. For the first quarter of FY26-27, it was 1.5%, accelerating to 9.5% in Q2 FY26-27.
- Actual Net GST Growth: Was approximately 4% in FY25-26 and 8.2% in Q2 FY26-27.
Furthermore, net GST revenue as a share of GDP declined to 5.7% in FY25-26, down from around 6% in the preceding two fiscal years and a pre-GST average of about 6.2%.
September 2026 Collections and the Post-2025 Reforms
While the economists' analysis points to a slowdown, recent monthly data shows strong absolute collections. Gross GST collections for September 2026 surged 14.7% year-on-year, exceeding ₹2.03 lakh crore. Domestic collections rose 10.1% to ₹1.38 lakh crore, and import revenue jumped 26% to ₹65,525 crore. After refunds, net collections increased 18.1% to over ₹1.76 lakh crore.
However, the economists caution against interpreting these robust monthly figures as a return to the faster growth rates observed in the early years of the GST regime. They emphasize that the September 2025 reforms, which involved simplifying tax rates and re-labelling certain levies like compensation cess and additional excise duty, have fundamentally altered how GST revenue is measured and compared.
The broader concern remains whether India's GST collections can sustain the necessary revenue buoyancy to support government finances and maintain a healthy fiscal relationship between the Centre and states, especially when underlying growth appears to be considerably slower than headline figures suggest.