Datanomics: GST turns 9, collections see slower growth in recent years

GST enters its 10th year with slab reforms underway, but key sectors remain outside the tax net as revenue growth and tax-GDP gains trail expectations

The goods and services tax (GST) regime enters its 10th year tomor­row with a major reform on the slab front having been undertaken around the second half of 2025-26 (H2FY26). However, major policy reforms are still lacking since petroleum products, alcohol, parts of real estate, and electricity remain outside this indirect tax system. That shows in the GST collections. Though average GST collections in absolute terms are almost 90 per cent higher than those in the pre-GST period, other parameters tell the real story. The average growth rate in tax collections and the tax-GDP ratio are lower under the GST regime compared to the pre-GST era. Collections were further marred by GST cuts starting September 22, 2025. Growth in H2FY26 slowed to 5.7 per cent from 8.3 per cent in H1FY26. Had the second half also grown at 8.3 per cent, the average growth rate would have been slightly higher in last seven financial years. Since GST officially came into effect on July 1, 2017, full-year collection data is available from FY19 and growth in collections is available from FY20.

 

Avg GST collections higher than pre-GST period

GST collection growth rate lagging pre-GST period

Tax-GDP ratio behind pre-GST period