Revenue growth slows
The moderation becomes more apparent when GST revenue is compared with the broader economy. The authors argue that headline collection numbers can obscure the underlying trend because some revenues have effectively been shifted between
GST and other tax categories.
In the first quarter of FY27, headline GST revenue growth was 10.5%, but actual gross GST growth was only 1.5%, according to their calculations. In Q2 FY27, headline growth accelerated to 15%, while actual gross GST growth stood at 9.5% and actual net GST growth at 8.2%.
The authors also point to net GST revenue as a share of GDP. This declined to 5.7% in FY26, compared with around 6% in FY24 and FY25 and a pre-GST average of about 6.2%.
September collections remain strong
The latest monthly data provides a more positive picture in absolute terms. Gross GST collections increased 14.7% year-on-year to more than ₹2.03 lakh crore in September, according to government data.
Domestic GST collections rose 10.1% to around ₹1.38 lakh crore, while revenue from imports jumped 26% to ₹65,525 crore. After refunds, net GST collections increased 18.1% to more than ₹1.76 lakh crore.
September was the third month in FY27 in which gross GST collections exceeded ₹2 lakh crore. During April-September, gross GST collections rose 11.6% to more than ₹12.46 lakh crore, while net collections increased 10.4% to over ₹10.66 lakh crore.
However, the economists’ analysis suggests that strong monthly collections should not be confused with a return to the much faster revenue growth recorded earlier in the GST regime.
GST revenue growth: headline vs underlying
| Period | Headline GST growth | Actual gross GST growth | Actual net GST growth |
|---|---|---|---|
| FY23 | 21.9% | 22.2% | 22.2% |
| FY24 | 11.6% | 14.0% | 14.0% |
| FY25 | 9.4% | 9.4% | 8.1% |
| FY26 | 7.5% | 5.8% | 4.0% |
| Q1 FY27 | 10.5% | 1.5% | — |
| Q2 FY27 | 15.0% | 9.5% | 8.2% |
What changed after September 2025?
The September 2025 GST reforms simplified the rate structure and reduced rates on several goods and services. At the same time, the treatment of some levies changed.
Subramanian, Felman and Anand argue that this “re-labelling” has made it harder to compare GST revenue across periods on a like-for-like basis. In particular, the treatment of compensation cess and additional excise duty affects both the headline GST number and the revenue available for sharing with states.
The authors therefore argue that the headline GST collection figure needs to be supplemented by measures of actual gross and net GST revenue.
The broader concern is whether GST collections can sustain the revenue buoyancy needed to support government finances and the Centre-state fiscal relationship. While monthly collections remain robust, the post-2025 data points to a considerably slower underlying growth trajectory than the headline numbers alone suggest.
