Despite decline in GST collection last month strong rebound ahead, say experts

GST collection for the month of November has shown a downturn when compared to the collection during the previous month this year.

The Gross domestic GST collections for the month of November (which pertain to supplies made in the month of October) have shown a decline of 2.3 per cent compared with the same numbers for the month of November 2024.

Talking to Bizz Buzz, the former Principal Chief Commissioner of GST in Mumbai says, “This slowdown in the revenue collection was very much expected due to the reduction in the rates of GST for large number of commodities in September.”

In all probability, revenue collection is bound to bounce in the months to come as a result of significant growth in mass consumption of the consumer goods and consumer durables etc, triggered by the reduction in GST rates, he said.

This data is for the first full month after the GST rate reduction. This drop is clearly due to the effect of GST rate reductions coming into effect from September 22.

Karthik Mani, Partner, Indirect tax at BDO India, says, “It was hoped that the increase in volume of purchases due to increased affordability from the rate reduction, that too, in the festive period of Diwali which traditionally sees significantly high demand, would offset the drop in revenue due to GST rate reductions, but instead, there is a reduction in the Gross domestic GST collections.”

Also, while previously the compensation cess collection was also included in the GST collection data, present data has treated cess separately, and if the cess is also considered as a part of Gross domestic GST collection, the numbers would show a further dip, since the cess collection has reduced by two-thirds, mainly due to only tobacco now being subject to the cess and other items like aerated beverages and motor vehicles going outside the ambit of cess.

While the net GST collections on an overall basis, excluding cess, have shown a minor increase of 1.3% (net decrease if the cess is also considered) due to significant increase in IGST collections on imports as well as some dip in the amount of refunds, it would now be interesting to see the GST collections for the next few months to see the level at which the collection numbers stabilise after the rate reductions.

The net cash outgo under the first supplementary demand for grants is relatively moderate, and could be financed through savings found under other heads.

Gross GST collections were a marginal 0.7% higher on a YoY basis in November 2025, as increased consumption likely offset the impact of the rate cuts across a large number of items. However, based on the CGA data, the asking rate for CGST collections during the rest of the year is quite high, and a miss on this account seems inevitable.

“While we believe that taxes will fall short of the FY2026 BE, higher-than-budgeted non-tax revenues would absorb a part of this shortfall,” says Aditi Nayar, Chief Economist, Head - Research & Outreach, Icra.

Overall, we do not expect a material fiscal slippage at the current juncture.