GST collections flat for November, but data point to consumption boost

Although Goods and Services Tax (GST) collection remained almost flat in November, government sources noted that rationalization of the indirect tax rate is providing the required boost to consumption. They also pointed out that the GST rate structure has now changed and the compensation allowance is no longer part of the basic tax structure.

They pointed out that “these matters must be taken into account, and these numbers cannot be compared to before.”

The sources stressed that rationalizing the rate under the Goods and Services Tax was a major reform, and emphasized that significant gains would come from it in the future, as it created an environment for a rational tax system.

Total GST collections in November rose 0.7% YoY to Rs 1.7 lakh crore, while net revenue grew 1.3% YoY to Rs 1.52 lakh crore. Data for November 2025 reflects collections for October 2025, which was the first full month since interest rate cuts as part of the next generation GST reforms came into effect.

As part of the GST reform, the government has rationalized rates at two major rates of 5% and 18% along with a 40% rate on faulty goods like tobacco and paan masala, while the 12% rate, along with compensation, has been scrapped. A new national security health tax is set to be imposed on cigarettes and tobacco products, for which the Finance Minister submitted bills to the Lok Sabha on Monday.

The sources indicated that the moratorium on compensation for cigarettes and tobacco products, which is currently used to repay loans, is likely to end later this year. They noted that “repayment is on track.”

Based on sales data provided by taxpayers for November, the sources said the reforms show consumption has increased but future figures will give a more comprehensive picture.

“The impact of these measures is clear in the data: the taxable value of all supplies under GST rose by 15% during the two-month period from September to October 2025, compared to the same period in 2024. Growth in the same period last year was 8.6%,” an official source explained, adding that this increase in taxable value shows a strong rise in consumption, driven by lower rates and improved compliance behaviour.

They further noted that the trends confirm that the next generation GST reforms have not disrupted revenue stability, and that the boom on the consumption side is starting to translate into higher taxable value in key sectors.

Growth was particularly strong in sectors where prices were rationalised, such as fast-moving consumer goods, pharmaceuticals, food products, automobiles, medical devices and textiles, and the taxable value of supplies saw much higher growth.

For example, in ready-to-eat food items (excluding beverages, tobacco products and paan masala), supply value increased by 17% in September and October 2025, compared to 11% a year ago, while for buses and passenger vehicles, it rose to 20% in September and October 2025, compared to a growth of 12% a year ago.

Likewise, for construction-related goods such as cement, glass, ceramics and stone products, the supply value rose by 19% in September-October 2025 versus 2% growth a year ago.

The pharmaceutical industry also saw a 13% growth in supply value in September and October 2025 compared to 5% growth a year ago. However, two sectors – textiles (apparel and fabrics) and two-wheelers recorded lower growth in supply value in September and October this year compared to last year. This is due to geopolitical developments, decline in exports in the case of textiles and affordability of small cars in the case of two-wheelers and bikes, sources said.

Experts also noted that November data points to increased consumption.

“It is important to note that overall GST collections (excluding taxes) remained largely the same as in the same month last year, indicating that the loss due to price cuts has been offset by higher consumption, albeit not on the expected scale,” said MS Mani, partner, Deloitte India.

“There is a wide variation in collections at the state level and a sectoral causal analysis is necessary at this stage to strengthen the collections through necessary policy measures. The GST registration data also indicates that the rise in the number of registrations is not directly linked to higher revenues,” he added.

The recent decline in GST revenue collections was largely expected, reflecting the immediate, albeit short-term, impact of recent rate rationalization measures, said Saurabh Agarwal, tax partner at EY India. “This is further exacerbated by the phenomenon of heavy pre-stocking by businesses in the previous month to meet the expected increase in festive demand and post-rate rationalization. This pre-loading of purchases has temporarily distorted the collection figures for the current month,” he added.