India's GST Collections Grow 4.6% in October Amid Rate Cuts, Consumption Remains Resilient

India's Goods and Services Tax (GST) collections reached ₹1.96 lakh crore in October 2025, a 4.6% year-on-year increase. This growth reflects sustained consumption resilience despite significant GST rate rationalization and the discontinuation of compensation cess on items like automobiles, effective from September 22. While the figures align with government expectations, experts suggest upcoming months will clarify revenue buoyancy under the new regime, noting potential challenges such as increased refund claims and uneven growth across states.

Industry experts highlighted that the marginal growth underscores consumption robustness, but cautioned about disparities among states, requiring targeted policies. Vivek Jalan of Tax Connect Advisory Services noted that GST rate cuts might deepen the inverted duty structure in sectors like packaging and pharmaceuticals, leading to a surge in refund claims from November, potentially impacting net revenue. Karthik Mani of BDO India observed flat domestic transactions but anticipates higher November collections due to increased supply volumes. Manoj Mishra of Grant Thornton Bharat cited a 40% surge in domestic refund disbursements and a 13% rise in import-linked IGST as positive indicators.

Sivakumar Ramjee of Nangia Andersen LLP identified major states as key contributors but warned weaker states might face headwinds. Saurabh Agarwal of EY India and Pratik Jain of Price Waterhouse & Co LLP emphasized that tax certainty and efforts to address working capital pressures boost investor confidence.

Impact: This news is significant as GST collections indicate India's economic health, consumption, and fiscal strength. Consistent growth signals resilience, boosting investor sentiment. However, potential refund pressures and state-level disparities require monitoring. Impact Rating: 8/10

Difficult Terms: GST (Goods and Services Tax): A unified indirect tax levied on the supply of goods and services across India. GST rate rationalisation: The process of adjusting and simplifying the different tax rates under the GST system. Compensation Cess: An additional tax levied on specific goods to compensate states for revenue losses post-GST implementation; its abolition impacts collections. Inverted Duty Structure: A tax scenario where the tax on inputs is higher than on finished goods, leading to refund claims. CGST (Central Goods and Services Tax): The portion of GST revenue that belongs to the central government.