GST Collections Flat at Rs 1.70 Lakh Crore in November Despite Rate Cuts; Taxable Supplies Up 15%
India's Goods and Services Tax (GST) collections remained largely stable in November, with gross mop-up staying flat at Rs 1.70 lakh crore compared to Rs 1.69 lakh crore in the same month last year. The resilient collections come despite sweeping rate cuts for over 375 items under GST 2.0 that became effective from September 22, 2025, demonstrating that increased consumption volumes are offsetting lower tax rates.
Key Collection Figures for November
Gross GST Collections
- Excluding cess: Rs 1.70 lakh crore (flat versus Rs 1.69 lakh crore last year)
- Including cess: Rs 1.75 lakh crore (down 4.0% from last year)
Net GST Collections (After Refunds)
- Excluding cess: Rs 1.52 lakh crore (up 1.3% from Rs 1.50 lakh crore last year)
- Including cess: Rs 1.56 lakh crore (down 4.2% from last year)
Component-wise Breakdown
- Gross domestic GST: Rs 1.24 lakh crore (down 2.3%)
- Import GST: Rs 45,976 crore (up 10.2%)
Strong Consumption Growth: 15% Surge in Taxable Supplies
Despite the flat headline collection numbers, government officials expressed optimism about the consumption uplift witnessed after GST 2.0 implementation. The taxable value of all supplies under GST grew by 15% during the September-October period, nearly doubling the 8.6% growth recorded in the same period last year.
"This surge in taxable value demonstrates strong consumption uplift, stimulated by reduced rates and improved compliance behaviour," a government official stated, adding that reducing tax on essentials and mass-use items would create a Laffer Curve-type demand uplift.
Understanding the Laffer Curve Effect
The reference to the Laffer curve is significant. According to this economic principle, government revenues initially increase as tax rates rise, but beyond a certain optimal point, higher tax rates lead to declining revenues as they discourage economic activity. By lowering GST rates, the government appears to have moved closer to the optimal point where lower rates stimulate sufficient additional consumption to maintain revenue levels.
Sharp Decline in Cess Collections
GST compensation cess collections experienced a dramatic decline in November, reflecting the restructuring under GST 2.0:
- Gross cess collections: Rs 4,756 crore (nearly one-third of Rs 13,253 crore collected in November 2024)
- Net cess collections: Rs 4,006 crore (down 69.1% from Rs 12,950 crore a year ago)
This sharp decline occurred because the cess, which was previously levied on multiple product categories including cars, white goods, and demerit goods over and above the 28% rate, is now retained only for pan masala, tobacco, and related products until states' pandemic-era compensation loans are repaid.
Expert Analysis: Collections Hold Despite Rate Cuts
Deloitte India Perspective
MS Mani, Partner at Deloitte India, noted that while GST collections were expected to moderate due to steep rate cuts across the board, there was an expectation of a consumption boost. "It is essential to note that the Gross GST collections (excluding cess) have largely remained the same as the same month last year, indicating that the loss on account of rate reductions have been compensated by higher consumption, although not at the expected scale," he observed.
Mani added that while GDP data indicates robust growth, "the GST collections over the next four months would indicate whether the FY26 fiscal targets can be met as planned."
PwC Analysis
Pratik Jain, Partner at Price Waterhouse & Co LLP, commented: "GST collection for November is only marginally higher than last year. It was expected as this reflects a full month's (i.e., October 2025) impact of GST 2.0 rate cuts. With steady increase in demand, the collection should progressively become better in the next few months."
Sector-wise Performance: Winners and Losers
Government officials highlighted that tax collection has been especially strong in sectors where rate rationalization was implemented. Sector-wise data revealed interesting consumption patterns:
Strong Performers
Construction Materials
- Cement, glass, ceramic, and stone products: 19% year-on-year growth in taxable value (September-October) versus just 2% during the same period in 2024
Automobiles
- Buses and passenger cars: 20% growth in taxable value (September-October), up from 12% last year
- Two-wheelers and bicycles: 18% growth versus 23% last year, possibly indicating consumer preference shifting toward more affordable four-wheelers, officials noted
Healthcare
- Pharmaceutical products: 13% growth, up sharply from 5% last year
Consumer Goods
- Leather industry: 18% growth versus 9% last year
- Fast-moving consumer goods: Significantly higher growth in taxable value
- Food products: Strong growth following rate cuts
- Medical devices: Robust expansion
Slower Growth Segments
Textiles
- Fabric and apparels: 8% growth compared with 12% last year, which officials attributed to the global trade situation following US tariffs
GST 2.0: Historic Rate Structure Simplification
The flat collections come after the most significant restructuring of GST rates since the tax's introduction. Post-September 22, 2025, as part of GST 2.0, the rate structure was dramatically streamlined:
Old Structure (Pre-September 22)
- Four main slabs: 5%, 12%, 18%, and 28%
- Compensation cess on various products above 28%
New Structure (Post-September 22)
- Two primary slabs: 5% and 18%
- Luxury goods: Special 40% rate
- Cess retention: Only for pan masala, tobacco, and related products
Key Item Movements
- 28% slab items: Shifted to either 18% (white goods like air conditioners, washing machines, small cars) or moved up to 40%
- Over 375 items: Affected by rate changes
Volume Growth Even Higher Than Value Growth
Government officials emphasized an important distinction: "In these sectors, the taxable value of supplies has seen significantly higher growth, confirming that lower GST rates translated directly into higher consumer spending. This growth is in value terms. Since GST rates were lower, the growth in volume terms will be even higher."
This means that actual consumption quantities increased by even more than 15%, as the value growth already accounts for lower prices due to reduced GST rates. This validates the government's strategy of stimulating consumption through tax cuts.
Import GST Performance
While domestic GST collections declined marginally by 2.3%, import GST surged by 10.2% to Rs 45,976 crore. This strong performance in import duties reflects:
- Continued demand for imported goods
- Strong import volumes across categories
- Potentially rupee depreciation effects
- Festive season demand including imported products
Legislative Changes on the Horizon
The central government on Monday introduced two legislative bills in Lok Sabha to address the changing cess landscape:
- Higher excise levy: On tobacco and related products
- New cess: Called 'Health Security se National Security Cess' on pan masala
These measures aim to replace the compensation cess, which is set to end once states' pandemic-era loans are fully repaid.
Implications for Fiscal Targets
Positive Indicators
- Collections holding steady despite major rate cuts
- 15% growth in taxable value showing strong consumption momentum
- Import GST growing robustly at 10.2%
- Broad-based consumption growth across multiple sectors
Areas to Monitor
- Whether consumption growth accelerates further in coming months
- Impact of global trade tensions on export-oriented sectors
- Festive season boost to collections in December-January
- Sustainability of 15% growth in taxable supplies
Economic Growth and Consumption Patterns
The GST data provides important insights into India's consumption patterns and economic growth:
Urban vs. Rural Consumption
- Strong growth in passenger cars and white goods suggests urban consumption revival
- Two-wheeler growth indicates rural and semi-urban demand patterns
- Construction materials growth reflects real estate and infrastructure activity
Sector-specific Trends
- Healthcare focus: Pharmaceutical products seeing accelerated growth
- Housing and construction: Cement and related materials showing strong momentum
- Automobile shift: Preference moving toward four-wheelers from two-wheelers
- Export challenges: Textiles growth slowing amid global trade uncertainties
Policy Success Metrics
The November GST collections data suggests that GST 2.0's core objectives are being achieved:
Tax Simplification
- Reduction from four to effectively two main slabs
- Clearer tax structure for businesses and consumers
- Reduced compliance complexity
Consumption Stimulus
- 15% growth in taxable supplies validating lower-rate strategy
- Particularly strong performance in mass consumption categories
- Evidence of Laffer curve effect operating as intended
Revenue Stability
- Collections holding steady despite rate cuts
- Volume growth compensating for rate reductions
- Import GST providing additional revenue cushion
Looking Ahead: Next Four Months Critical
As Deloitte's MS Mani noted, the next four months of GST collections will be crucial for determining whether FY26 fiscal targets can be met. Several factors will influence upcoming collections:
Positive Factors
- Full impact of GST 2.0 rate cuts on consumption
- Festive season carryover effects
- Year-end corporate purchases and spending
- Continued infrastructure activity
- Government capital expenditure acceleration
Risk Factors
- Global trade tensions affecting exports
- Potential slowdown in specific sectors
- Base effect from high collections last year
- Monsoon impact on rural consumption
- Geopolitical uncertainties
Compliance and Administrative Improvements
The government official's reference to "improved compliance behaviour" alongside rate cuts suggests that GST administration is becoming more effective:
- Better detection of tax evasion
- Improved voluntary compliance
- Data analytics enhancing tax collection efficiency
- Reduced leakages in the tax system
Conclusion
India's November GST collections at Rs 1.70 lakh crore, remaining flat year-on-year despite major rate cuts, represent a significant achievement for the GST 2.0 reform. The 15% growth in taxable value of supplies during September-October—nearly double the previous year's growth—demonstrates that lower tax rates are successfully stimulating consumption volumes sufficient to maintain revenue levels.
The sector-wise data reveals broad-based consumption growth, with particularly strong performance in construction materials, automobiles, pharmaceuticals, and consumer goods. While some sectors like textiles face headwinds from global trade tensions, the overall picture suggests that GST 2.0's twin objectives of simplification and consumption stimulus are being achieved.
The dramatic 69% decline in cess collections reflects the successful restructuring of the GST framework, with cess now limited to tobacco and pan masala products. The government's introduction of new legislation to replace the compensation cess indicates proactive planning for the transition.
As experts note, the critical test will come in the next four months as the full impact of GST 2.0 becomes apparent. With strong GDP growth, robust consumption indicators, and improving compliance, India's indirect tax system appears to be delivering on its promise of efficiency, simplicity, and revenue adequacy—validating the ambitious GST 2.0 reform despite initial concerns about revenue impact from sweeping rate cuts.
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