Consumption engine fires up while GST growth cools

Sales value soared in October, while tax cuts, tariffs slowed GST revenue growth

- Gireesh Chandra Prasad & Anubhav Mukherjee

India's September tax cuts put the brakes on revenue growth but delivered the consumption boost as intended, government officials said.

The Centre and states together collected goods and services tax (GST) revenue of 1.7 trillion in November, only slightly more than 1.69 trillion they collected a year earlier. However, the actual sales value of goods and services was sharply higher in September October, indicating higher consumption, the officials said on condition of anonymity.

"Overall, the taxable value of all supplies under GST grew by 15% during the two-month period of September-October, compared to the same period in 2024. Growth in the same period last year was 8.6%. This surge in taxable value demonstrates strong consumption uplift, stimulated by reduced rates and improved compliance behaviour," the official said, citing tax return filing data.

The GST cuts that took effect on 22 September were first indicated by Prime Minister Narendra Modi in his Independence Day speech, and approved by the GST Council on 3 September. The November GST data released on Monday reflects the sales of October, the first full month of lower tax rates. The numbers illustrate the impact of GST cuts, the immediate consumption boost, and the effect of US tariffs on Indian exports.