With a 3.2% year-on-year (YoY) increase in gross collections of goods and services tax (GST) in May, boosted by a surge in imports, government sources remain confident of achieving the full-year GST revenue target.
The Centre has pegged gross GST collections at ₹10.19 lakh crore in FY27 from ₹10.45 in the revised estimate of FY26. But with the West Asia conflict continuing, there have been concerns that tax collections may be hit due to slower economic activities and demand.
According to official data released by the Finance Ministry on June 1, gross GST collections in May increased by 3.2% to ₹1.94 lakh crore, while net GST collections rose by 3.3% to ₹1.66 lakh crore.
But adjusting for a ₹10,000 crore one-time payment made by a telecom operator for spectrum allocation in May 2025, the gross GST collection this May would be higher by about 9% and net collection would be even higher by about 10.1%.
However, gross domestic GST revenue contracted by 2.6% in May to ₹1.34 lakh crore. Net domestic GST revenue contracted by 2.3% YoY to ₹1.17 lakh crore.
Sources underlined that the domestic economy is experiencing genuine demand expansion and the rise in integrated GST (IGST) led by imports of intermediary goods and raw materials are a leading indicator of demand for manufacturing activity.
In May, IGST on imports grew by over 20.2% to ₹60,166 crore from ₹50,070 crore a year ago. “This is the standout performer in the revenue mix. The bulk of this import growth is driven by raw materials and intermediate inputs that feed India’s industrial production chain,” sources said, adding that a granular review of the data from May 1 to 25 reveals that the surge was driven overwhelmingly by industrial raw materials and energy inputs.
For instance, in electronic components, processing units recorded over 387% growth in IGST and memory chips over 205% increase. This reflects sustained domestic investment in electronics, IT, and telecom manufacturing, sources said.
Similarly, IGST revenue from copper inputs across four streams rose sharply — unrefined copper anodes (+219%), copper ore concentrates (+94%), and copper (+89%) and aluminium scrap (+46%). This benefits the wire and cable production, electrical equipment, and the renewable energy supply chain.
Sources further said that the over 66% rise in lithium-ion battery imports underlines India’s deepening integration into the EV and grid storage ecosystem.
Coal accounts for 8.1% of incremental IGST, with collections rising by more than 391%, reflecting the heightened fuel and coking coal requirements of steel plants, cement kilns, and thermal power generation, they further underlined.
Experts also noted that the high IGST revenue have supported overall GST collections in the month.
Abhishek Jain, Indirect Tax Head and Partner, KPMG said the GST collections for May align with the global and domestic news broadly. “While import GST has recorded a near 20% growth, this may also be attributed to rupee depreciation. Adjusted for the one-time telecom payment in the base, domestic collections reflect moderate growth in line with prevailing economic conditions. It is heartening to see the continued momentum in export IGST refunds, which plays an important role in supporting exporter liquidity and keeping India’s supply chains competitive.”
Vivek Jalan, Partner Tax Connect Advisory Services, also said the resilience in import-linked revenues has helped overall net GST collections grow, underscoring the strength of India’s external trade flows.
