Gross Goods and Services Tax (GST) collection surged 6.3% to over ₹1.86 lakh crore in August 2025, up from ₹1.75 lakh crore in the year-ago period, driven by higher domestic revenues, government data released today showed. The GST revenue for July was higher than August as the gross collection stood at ₹1.96 lakh crore.

Of the total GST revenue, the domestic collection rose 9.6% to ₹1.37 lakh crore, but tax from imports fell 1.2% to ₹49,354 crore. Refunds on GST also fell 20% YoY to ₹19,359 crore.

The latest data on GST comes two days before the crucial GST Council meeting, which is going to finalise the much-anticipated GST rates under the new regime, also called GST 2.0. "A steady year-on-year rise in GST collections reflects genuine growth fueled by strong consumer demand across the economy. Robust GST revenues have instilled a belief in lawmakers to introduce GST 2.0, aimed at delivering significant tax rate cuts that benefit Indian businesses and citizens alike," says Harpreet Singh, Partner, Deloitte India.

As the retail prices go down, the tax reductions are expected to further boost consumer demand, ultimately driving higher tax collections over the long term, said Singh.

August’s GST collections data highlights a familiar trend, as a few large states continue to anchor national collections, with Maharashtra, Karnataka, Tamil Nadu, and Gujarat accounting for over a third of the total ₹1.86 lakh crore. "The nearly 11% growth in net revenues was aided by strong domestic demand and lower refunds, underscoring both economic resilience and compliance gains. The proposed GST rate cuts will likely lift consumption in the festive quarter, though without careful calibration, they may narrow state revenues and create settlement pressures," says Manoj Mishra, Partner – Tax Controversy Management Leader, Grant Thornton Bharat LLP.

Karthik Mani, Partner- Indirect tax at BDO India, agrees that the growth in domestic GST collections is due to a growth in collections in almost all major states, with all these states cloaking 10% growth in revenue collections. "On a month on month basis, the gross GST collections have shown a decline of 4.8% and it would be an important input for the GST Council for assessing revenue loss as it considers the GST rate rationalisation proposals later this week."

However, the industry experts feel from a policy side, what's needed is a fully technology-driven platform for provisional refunds, which has been an ask of the industry. They say in times of geopolitical uncertainty, when the Indian manufacturers and exporters are reeling under pressure, it is important that GST refunds are cleared on time to support GDP growth. The growth of net GST revenue in August 2025 is driven mainly by a 20% degrowth in GST refunds, including both domestic and imports, says Vivek Jalan, Partner, Tax Connect Advisory Services. "While one argument could be that the refund applications are tremendously down, due to a hit in exports, yet this seems improbable, as the gross revenue is still growing by around 10%. Therefore, the better reason for degrowth in refunds would be the possible holding back of refunds on grounds."

The increase in collections is in line with the GDP growth data shared recently and would give the policy makers the confidence to move ahead with GST 2.0 reforms, feel experts. However, the upcoming months could see moderate collections despite GST 2.0. "The demand increases, which begins in the festival season starting Aug and continues till November, should result in significant jumps in collections in the coming months; however, reduced GST rates that are expected to be announced soon may temporarily moderate the collection," says MS Mani, Partner, Deloitte India.

Notably, the government is coming up with the GST 2.0 regime, which is likely to remove the 12% and 28% slabs and shift most goods from the 12% slab to 5% and from the 28% slab to 18%. Compensation cess will be subsumed under the sin and luxury goods GST at around 40%.