GST Collections Flat at Rs 1.70 Lakh Crore in November; Taxable Value of Supplies Surges Post GST 2.0

The government’s Goods and Services Tax (GST) mop-up for November, after refunds and excluding cess, stood at Rs 1.52 lakh crore, up 1.3% from Rs 1.50 lakh crore in the same month last year. Including compensation cess, net GST collections were Rs 1.56 lakh crore, representing a 4.2% decline from last year.

Gross GST receipts in November (for sales in October) held steady at Rs 1.70 lakh crore, unchanged from the previous year’s Rs 1.69 lakh crore. This follows the broad rate reductions under gst 2.0 for over 375 items, effective September 22. With compensation cess included, gross collections fell 4.0% to Rs 1.75 lakh crore in November.

“The surge in taxable value of supplies during September and October demonstrates strong consumption, driven by lower tax rates and improved compliance,” government officials stated. The taxable value of supplies rose 15% year-on-year, compared to 8.6% in the same period last year. Officials noted that reducing taxes on essentials and widely used products can create a Laffer Curve-like demand effect, where revenue increases with lower tax rates up to an optimal point.

Breaking down the sources, gross domestic GST collections dipped 2.3% to Rs 1.24 lakh crore, while imports contributed Rs 45,976 crore, a 10.2% increase. GST compensation cess receipts fell sharply, as only pan masala, tobacco, and related products remained subject to the cess after September 22, and previous back-to-back loans for states’ compensation during the pandemic had been repaid.

Overall cess collections in November totaled Rs 4,756 crore, down more than two-thirds from Rs 13,253 crore in November 2024. Net cess collections stood at Rs 4,006 crore, a 69.1% decline from Rs 12,950 crore last year.

The flat collections in November reflect the impact of sweeping gst rate cuts effective September 22. Experts, however, anticipate a gradual improvement in the coming months as consumption gains momentum.

MS Mani, Partner at Deloitte India, said, “Although GST collections were expected to decline due to rate reductions, there is evidence of consumption growth partially offsetting the revenue loss. While GDP indicators show healthy growth, GST collections over the next four months will indicate whether FY26 budget targets are achievable.”

Pratik Jain, Partner at Price Waterhouse & Co. LLP, added, “The November numbers are slightly higher than last year, reflecting the first full month of GST 2.0 rate cuts. Collections should gradually rise as demand strengthens.”

Sector-wise Impact of GST 2.0

Officials highlighted that industries affected by GST 2.0 rate rationalizationsuch as FMCG, pharmaceuticals, food items, cars, and medical devicesshowed substantial growth in taxable value, indicating increased consumer spending. Reduced tax rates directly contributed to this uplift in demand.

Under GST 2.0, the four-slab system (5%, 12%, 18%, 28%) was simplified to two main slabs5% and 18%with a special 40% rate applied to luxury items. Items previously in the 28% bracket, such as white goods (ACs, washing machines, compact cars), were moved to 18%, or to 40% in case of luxury items. Compensation cess now applies only to pan masala, tobacco, and related products.

The government also submitted legislative proposals in Lok Sabha to increase excise duties on tobacco and related products and to introduce new cess items.

In conclusion, while GST collections for November remained flat overall, the taxable value of supplies and sectoral growth indicate that GST 2.0 reforms are gradually stimulating consumption, potentially supporting revenue targets in the coming months.