Gross Goods and Services Tax (GST) collections in the first half of FY27 grew a robust 11.6%, driven by the surge in taxes collected on imported inputs and capital goods, and reflecting improved sentiments in the manufacturing industry.
Gross collections in September (largely August transactions) topped Rs 2 lakh crore mark, and was up 14.7% year on year, according to official data released on Thursday. Except for April and May, double-digit GST growth was reported for other months in the first half.
The double-digit growth in GST collections in April-September came despite the cuts in GST rates for a wide array of products that took place in September last year. With the festive season around the corner, experts expect indirect tax collections to be robust in the coming months.
While gross domestic GST revenues rose by a moderate 6.1% to Rs 8.74 lakh crore in H1, collections from imports jumped 27.1% to Rs 3.72 lakh crore. “This can be attributable to high demand for inputs and capital goods for supporting the local manufacturing under the Make in India initiative,” Rahul Renavikar, managing director at Acuris Advisors, said.
The government issued higher refunds amounting to RS 1.80 lakh crore during H1FY27 compared to Rs 1.52 lakh crore in the year ago period. “This must have been done to optimise business liquidity, a consistent demand by the trade and industry,” Renavikar said.
September was the third consecutive month when GST collections were at Rs 2 lakh crore or higher. It was also just the seventh time since the introduction of GST in 2017 that collections were higher than Rs 2 lakh crore.
On a month-on-month basis, gross GST collections were up 1.8% from August. GST revenue post-refunds rose 18.1% on year in September to Rs 1.77 lakh crore as refunds fell 3% year-on-year to Rs 27,001 crore. Notably, domestics refunds fell 13.5% on year while import refunds rose 10.2% in September.
The robust rise in GST collections was driven primarily by a 25.9% year-on-year growth in import revenue to Rs 65,525 crore. Even in April-September, import revenue jumped 27.1% to Rs 3.72 lakh crore, while domestic revenue rose just 6.1%
“The continued strength in the import component is noteworthy, particularly against the backdrop of elevated energy prices, geopolitical disruptions and higher landed costs for globally traded commodities. It therefore provides an important boost to collections but should not be interpreted entirely as a proxy for stronger domestic consumption,” said Manoj Mishra, partner and tax controversy management leader, Grant Thornton Bharat.
Domestic GST collections grew 10.1% in September to Rs 1.38 lakh crore. Domestic collections comprised Central GST of Rs 37,762 crore, State GST of Rs 45,363 crore, and Integrated GST of Rs 54,871 crore, according to the official data
“The increased focus on complicated and the increasing number GST audits undertaken this year appear to be yielding results in the form of the gross monthly GST collection once again crossing the Rs 2 lakh crore mark,” said MS Mani, partner, Deloitte India.
The latest tax data comes just days before the GST Council is set to meet on October 7, more than a year after its last meeting where the number of tax slabs to two from four earlier. At the meeting, the Council is expected to take up process reforms on registrations, refunds, and input tax credit.
“If the Council can translate GST 2.0 into meaningful process reforms around ITC, registration, refunds and compliance, it could strengthen the quality of revenue growth by reducing friction for compliant businesses and improving tax efficiency,” Mishra said. “The next phase of GST, therefore, is less about headline rate changes and more about making the system work better and that could provide an important foundation for sustaining the current momentum,” he added.
In terms of state-wise performance, growth was broad-based. Several states like Maharashtra, Karnataka, Gujarat, Telangana, and Uttar Pradesh registered near or above 20% growth in April-September.