GST mop up climbs 6.1% in December on import strength, refunds cap net gains

India’s Goods and Services Tax (GST) collections showed steady momentum in December 2025, rising 6.1% year-on-year to Rs 1.75 lakh crore, supported by strong import-related revenues and stable domestic economic activity. Collections stood at Rs 1.64 lakh crore in the same month last year, according to data released by the government on Thursday.

December’s performance came after a relatively weak showing in November, when total GST collections rose just 0.7% to around Rs 1.70 lakh crore, indicating that revenue growth remains uneven across the months. Despite this volatility, the broader trend remains positive. On a year-on-year basis (April-December 2025), total GST collections rose to Rs 16.5 lakh crore, registering a strong YoY growth of 8.6%.

Net GST revenue, which accounts for refunds, stood at Rs 1.45 lakh crore in December, representing a 2.2% increase over the previous year. Cumulatively, net collections for the first nine months of the financial year stood at Rs 14.25 lakh crore, up 6.8% year-on-year, reflecting continued compliance and tax recovery.

However, refund inflows rose sharply during the month. Total GST refunds stood at Rs 28,980 crore, nearly 31% higher than last year. Domestic recoveries rose by 62%, while export-related recoveries decreased marginally by 1.9%. The sharp rise in domestic recoveries has impacted net collections and partly explains the slower growth in net revenues compared to total collections.

A closer look at the composition of GST receipts shows a clear disparity between domestic taxes and import-related taxes. Domestic GST revenues grew 1.2% year-on-year to Rs 1.22 lakh crore in December, indicating cautious consumption trends. In contrast, GST on imports jumped 19.7% to Rs 51,977 crore, underscoring the resilience of business activity and higher customs-related tax flows.

The amount of compensation, which continues as a transitional tax until outstanding loans and interest obligations are repaid, has been sharply reduced. Net revenue fell to Rs 4,238 crore in December, compared to Rs 12,003 crore in the previous year, a decline of nearly 65%. This decrease reflects lower tax benefits and higher adjustments through refunds.

State data revealed a mixed picture after the settlement. Several northeastern states recorded moderate gains, with Arunachal Pradesh, Manipur and Meghalaya recording growth of 7-8%, while Assam recorded growth of 5%. On the other hand, Jammu and Kashmir, Punjab and Ladakh saw contractions, highlighting regional disparities in economic activity.

Among the larger states, Maharashtra (15%), Gujarat (12%), and Haryana (16%) recorded strong growth, while Tamil Nadu (8%), Karnataka (5%), and Uttar Pradesh (5%) recorded moderate gains. West Bengal witnessed a marginal growth of 1%, while Madhya Pradesh recorded a decline of 2%. The union territories also showed a contrast, with Chandigarh growing by 2% and Lakshadweep witnessing a sharp contraction of 37%.

Commenting on the data, Vivek Jalan, Partner at Tax Connect Advisory Services, said the clear disconnect between strong GDP growth and muted domestic GST collections reflects the composition of the recent economic expansion. “GDP exceeding 8% and net domestic GST revenue growth falling by 5.1% can be explained by the fact that GDP growth has a major component of increased government expenditure which, when discounted, leads to lower GST collection,” he said. Jalan added that the consumption impact of government spending usually occurs with a lag, and GST collections in fiscal years 2026-27 are likely to rebound sharply.

Jalan also noted that GST 2.0 rate cuts also impacted December collections. “The price cuts have created or deepened the inverted duty structure in sectors such as packaging, agriculture and pharmaceuticals. Taxpayers in these sectors applied for the inverted duty refund in November and received it in December, further impacting GST collection,” he said.