GST collections dip in 20 of 36 states and Union Territories in October

Twenty of India's 36 states and UTs saw GST revenue decline in October 2025 - the weakest month of FY26 - as businesses adjusted to the GST 2.0 rate cuts implemented in late September

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Twenty out of 36 states and Union Territories (UTs) in India saw their goods and services tax (GST) collections contract in October, marking the weakest monthly performance so far in the financial year 2026 (FY26) as businesses adjusted to the implementation of the GST 2.0 rate structure.

 

State GST collections grew just 2 per cent in October while gross GST rose 4.6 per cent, lowest in FY26.  The subdued collection came after a strong momentum in the first half of the financial year, with growth peaking at above 13 per cent in May.

 

Major states and UTs which saw their GST collections slip into negative territory in October include Himachal Pradesh (-17 per cent), Jharkhand (-15 per cent), Uttarakhand (-13 per cent), Andhra Pradesh (-9 per cent), Madhya Pradesh (-5 per cent), Rajasthan (-3 per cent) and Delhi (-1 per cent) pointing to a broad-based slowdown across consumption and industrial centres.

 

Even large contributors such as Haryana (0 per cent), Maharashtra (3 per cent), Tamil Nadu (4 per cent) and Gujarat (6 per cent) saw muted performance, significantly lower than their earlier double, digit growth in April and May. However, Karnataka and Telangana, which had seen subdued numbers in September, posted 10 per cent growth in October.

 

Officials and experts attributed the moderation to the timing of the GST 2.0 rate rationalisation, which became effective on September 22. Since monthly GST inflows reflect activity from the previous month, October captures the period when many businesses held back invoicing in early September to pass on lower rates to consumers. GST 2.0 framework was first announced by Prime Minister Narendra Modi in his Independence Day address on August 15.

 

A senior state government official, however, said it was premature to conclude from data for a single month. “In September, only the last eight days reflected the new rates. Before that, many businesses held back sales in anticipation of the cuts,” the official said.

 

“Even with that timing issue, September’s state GST collections were still quite decent. We should wait for the November numbers to see whether this moderation persists, though our expectation is that growth will improve as the festive demand flows through,” the official added.

 

Tax experts echoed the view.

 

“Many sectors especially in automobiles and other high value goods, saw deferral in purchases in the first half of September in anticipation of the rate cut benefit to consumers effective September 22. As a result, only the last eight days of September captured the post-rate cut demand, making the October trend appear softer,” said Abhishek Jain, partner with KPMG.

 

“In order to understand the monthly variations in the state wise GST collections, it is essential to analyse the sector specific GST collections. This will also help in sectoral policy formulation and help states with their fiscal planning,” said MS Mani, partner with Deloitte.

 

As of now, GSTN does not release sector-wise GST collection data, limiting granular analysis of revenue trends. 

 

Experts also pointed out that the five major IT-services hubs-- Maharashtra (3 per cent), Karnataka (10 per cent), Tamil Nadu (4 per cent), Telangana (10 per cent) and Haryana (0 per cent) -- which together generate close to 80 per cent of India’s IT services output have avoided contraction in GST collections, supported by stable service-sector revenues even as goods-led states saw sharper moderation.

 

While most states saw muted or negative GST growth in October, a few smaller regions bucked the trend. Arunachal Pradesh (44 per cent) and Nagaland (46 per cent) in the North-East, along with Ladakh (39 per cent), Andaman & Nicobar Islands (30 per cent), and Dadra & Nagar Haveli & Daman & Diu (10 per cent), recorded strong growth.