Net GST revenue rises 3.3% in May as import-linked collections stay strong

Net GST revenue rose 3.3 per cent year-on-year in May, supported by strong import-linked collections, while adjusted gross revenue growth stood at 9 per cent

Goods and services tax (GST) collection in May, after accounting for refunds, rose 3.3 per cent year-on-year (Y-o-Y) to ₹1.67 trillion while the gross mopup increased 3.2 per cent to ₹1.94 trillion, according to the government data released on Monday.

 

The headline growth rates were weighed down by a high base effect due to a one-time payment of about ₹10,000 crore made by a telecom operator for spectrum allocation in May last year.

 

Excluding this, gross GST collection Y-o-Y grew 9 per cent. Net collection, after refunds, rose 10.1 per cent.

 

Growth was supported largely by import-linked revenues. Gross GST from imports rose 19.1 per cent to ₹59,654 crore during the month while net Customs increased 19.7 per cent to ₹49,403 crore.

 

 

On the other hand, gross domestic GST declined 2.6 per cent to ₹1.35 trillion and net domestic revenues fell 2.3 per cent to ₹1.18 trillion.

 

The decline in gross domestic revenues follows a 2.3 per cent Y-o-Y contraction recorded in November.

 

Refunds in May stood at ₹27,281 crore, up 2.6 per cent from a year earlier.

 

Government sources attributed the robust import collection to higher inbound shipments of industrial raw materials and intermediate goods used in manufacturing.

 

According to an analysis of the import data, collection from imports of computer-processing units rose 387 per cent while those from memory chips increased 205 per cent.

 

GST collection from the import of coal surged 391 per cent, making the commodity the single-largest contributor to incremental integrated GST (IGST) growth during the month.

 

Copper-related imports and lithium-ion batteries too recorded strong growth, indicating sustained activity in electronics manufacturing, power equipment, renewable energy, and electric-vehicle (EV) supply chains.

 

Government sources also pointed to broadbased growth in taxable supplies. The data from the Goods and Services Tax Network (GSTN) showed taxable supplies in the goods sector rose 26.9 per cent Y-o-Y to ₹40.1 trillion in April, the transaction month reflected in May returns.

 

Among key sectors, taxable supplies of computers grew 48.2 per cent, electrical machinery 34.1 per cent, telecom equipment 24.6 per cent, and passenger vehicles 21.3 per cent.

 

Supplies in gold and precious metals increased 46.9 per cent, government sources said.

 

“Taxable supply is a good proxy for consumption. This growth is not concentrated in any single segment but spans agriculture, manufacturing, chemicals, metals, electronics, and consumer goods simultaneously. The domestic economy is, therefore, experiencing genuine demand expansion, which was the intention behind rationalisation in GST rates done in September last year,” a source stated.

 

The services sector also maintained momentum, with taxable supplies rising 22.2 per cent to ₹11.5 trillion. Government sources said growth was broadbased across categories, led by real estate (50 per cent), legal and accounting (47.2 per cent), accommodation and food (41.6 per cent), maintenance and repair services (32.4 per cent), and transport (21.3 per cent).

 

In the first two months of FY27, gross GST collection stood at ₹4.37 trillion, up 6.2 per cent from ₹4.11 trillion in the corresponding period last financial year.

 

Adjusted for the one-time telecom payment in May last year, cumulative growth works out to 8.8 per cent.

 

Commenting on the numbers, Pratik Jain, partner with PwC India, said that despite the steep cuts in GST rates and geopolitical disruption for the past couple of months, collection showed robust 8.8 per cent Y-o-Y growth on a like-and-like basis collectively in April and May.

 

“Imports, as well as the domestic consumption of products and services, have expanded significantly, which shows our economic resilience. Given the increase in input costs due to supply-chain issues, this might be the right time for the government to consider providing working-capital support to industry by relaxing refund provisions with respect to input GST, which has been accumulating for many businesses.”

 

Abhishek Jain, head of indirect tax and head & partner, KPMG, said: “GST collection in May broadly aligns with global and domestic news. While import GST has recorded nearly a 20 per cent growth rate, this may also be attributed to rupee depreciation. Adjusted for the one-time telecom payment in the base, domestic collection reflects moderate growth, which is in line with prevailing economic conditions. It is heartening to see continued momentum in export IGST refunds, which play an important role in supporting exporter liquidity and keeping India’s supply chains competitive.”

 

According to Vivek Jalan, partner with Tax Connect Advisory Services, the upcoming GST Council meeting must address deepened inverted duty structures, particularly the blockage of refunds on input services, which continue to distort competitiveness.

 

“Bringing petroleum products under GST would be a landmark reform in rationalising tax incidence and reducing cascading effects. Equally important is easing the refund process with clear, transparent guidelines, especially around tagging certain taxpayers as ‘risky’, so that genuine businesses are not burdened with delays.”