GST revenues up 5% in September to ₹1.6 trillion as refunds surge 40%

Growth in India’s net revenues from the goods and services tax (GST) slowed to 5 per cent in September to a tad over ₹1.60 trillion, 4.2 per cent below August’s tally of ₹1.67 trillion, primarily due to a sharp 40 per cent spike in refunds to taxpayers.

 

Net GST collections had risen 10.7 per cent in August, aided by a 20 per cent decline in refunds during the month.

 

Gross GST receipts, prior to effecting refunds, accelerated at a four-month high pace of 9.1 per cent in September, to ₹1.89 trillion, 1.5 per cent higher than August’s kitty.

 

The uptick in gross revenues from domestic transactions moderated to 6.8 per cent in September from 9.6 per cent in the preceding month. However, receipts from imports jumped 15.6 per cent, after a 1.2 per cent contraction in August. Refunds on domestic transactions surged 52.2 per cent, while exporters also witnessed a nearly 27 per cent increase in refunds.

 

Tax experts reckoned that the September’s tally belied expectations that the GST rate reductions first announced by Prime Minister Modi on August 15, would moderate economic activity during that month as people may wait for the new rates to kick in.

 

“The increase in gross GST collections to ₹1.89 trillion for the month indicates that there has not been any significant slowdown in economic activity in anticipation of the GST rate cuts during the month of August 25 as this data relates to transactions occurred in August” said MS Mani, partner with Deloitte.

 

“While a short-term slowdown was expected as consumers deferred purchases ahead of the new GST rates effective from 22 September, the impact was partially offset by businesses strategically adjusting prices and passing on benefits early,” noted Manoj Mishra, partner and tax controversy management leader at Grant Thornton Bharat.

 

In the first six months of 2025-26, net GST revenues have now increased 8.3 per cent to ₹10.38 trillion, with net domestic revenues growing at 6.7 per cent to ₹8.06 trillion and net collections from imports increasing 14.1 per cent to ₹2.31 trillion.

 

While gross GST collections are up 9.8 per cent to ₹11.93 trillion, refunds have risen 21 per cent to ₹1.54 trillion.

 

“The average monthly collections during FY26 are just a little short of ₹2 trillion a month, marking a significant increase from last year when the average monthly collections till September 24 were ₹1.8 trillion,” Mani stated.

 

Both domestic and export refunds have been growing at a healthy clip indicating stabilisation of the refund processes and bringing relief to businesses, he emphasised.

 

Saurabh Agarwal, partner at EY, attributed most of the rise in GST receipts on imports to proactive stocking by retailers and e-commerce platforms in anticipation of the high festive season demand.

 

“Going forward, while the impact of rate rationalisation might temper the increase (in GST receipts), we expect festive consumption to ensure collections maintain a positive trajectory,” said Agarwal.