State Bank of India (SBI) Group Chief Economic Advisor Soumya Kanti Ghosh has strongly rejected former Finance Secretary Subhash Chandra Garg's claim that India's Goods and Services Tax (GST) collections grew by a mere 4%.
Ghosh asserted that Garg's calculation, which includes the now-discontinued GST Compensation Cess in previous year figures, creates a misleading "apple-to-apple" comparison. He also highlighted significant base effects and robust current financial year collection trends.
Garg's 4% Claim and Government's Figures
Subhash Chandra Garg, in a recent column, questioned the government's interpretation of August 2026 GST numbers. Official reports showed gross GST collections at Rs 1,99,853 crore, a 14.8% increase over Rs 1,74,116 crore from August 2025. Garg argued this comparison excluded the Rs 11,782 crore Compensation Cess collected in August 2025, which, if added, would reduce the comparable growth for August 2026 to 7.51%.
Extending this logic to the first five months of FY27 (April-August), Garg calculated that while official gross GST collections grew 11%, including the cess would bring comparable growth down to 4.08%, and net growth to a "pathetic" 1.3%.
Ghosh Counters: Not 'Apple-to-Apple'
Ghosh firmly stated that incorporating the Compensation Cess into past figures for current comparisons is fundamentally flawed. The Compensation Cess was a temporary levy introduced during the GST transition period and was discontinued from April 2026 following a restructuring of GST rates. Many products previously subject to the cess are now subsumed under the new GST framework.
"Why include GST series from old numbers that include compensation?" Ghosh questioned, emphasizing that combining old and new series without accounting for the structural changes distorts the assessment of current GST performance.
Impact of Base Effects
The SBI economist also pointed to a significant base effect, particularly impacting May 2026 figures. While GST growth under the old series showed a -3.4% decline in May 2026, Ghosh explained that May 2025 had an unusually high base due to a one-off telecom spectrum-related payment of approximately Rs 10,000 crore. This anomaly, he argued, heavily skewed the five-month average cited by critics and should be considered separately.
Strong FY27 Collections and State Gains
Ghosh maintained that GST collections for FY27 have shown a strong growth trajectory. The first five months recorded an average growth of 11.2%, surpassing the Q1 nominal GDP growth of 10.3%. Even when including the cess under the old series, collections grew by an average of 6% during April-August 2026, excluding May.
Furthermore, Ghosh highlighted the broader impact on state finances. With the Compensation Cess discontinued and Additional Excise Duty introduced, states are projected to gain approximately Rs 1.43 lakh crore in FY27 over FY26. This figure accounts for both GST collections and states' share in Basic Excise Duty, presenting a more comprehensive picture of revenue accrual.
Ghosh concluded that comparisons ignoring the restructured GST framework, base effects, and the overall revenue impact for states offer a misleading portrayal of India's current GST performance.