Consumption gets a shot in arm with GST 2.0 reforms as demand zooms in Sept, October this year: Govt sources

GST 2.0 seems to have fired up the consumption engine in the economy with the growth in “taxable supplies” (goods and services) almost doubling in September - October 2025, compared with the same period in 2024. Taxable supply is any goods or service subject to consumption-based tax like GST.  

“GST Bachat Utsav” as the government prefers calling it indicates towards consumption uplift and improved compliance behavior, say government sources.

“The impact of these measures is clearly visible in data. Taxable value of all supplies under GST grew by 15% during the 2-month period of September–October 2025, compared to the same period in 2024. Growth in the same period last year was 8.6%,” said government sources.

“This surge in taxable value demonstrates strong consumption uplift, stimulated by reduced rates and improved compliance behaviour.  It vindicates our strategy that reducing rates on essentials and mass-use sectors would create demand-side buoyancy - a Laffer Curve–type demand uplift,” they pointed out.

Sources pointed out that these confirm that GST Next-Gen Reforms have not disrupted revenue stability, and that consumption-side buoyancy has begun to translate into higher taxable value in key sectors.

The source pointed out that sectors like FMCG, automobiles, pharma, medical devices and textiles have witnessed a strong growth. “Growth has especially been strong in sectors where rate rationalisation was implemented, such as FMCG, pharms, foods products, automobiles, medical devices, textiles etc. In these sectors, the taxable value of supplies has seen significantly higher growth, confirming that lower GST rates translated directly into higher consumer spending,” they said.

An important point to not over here is that this growth is in value terms and since GST rates were lower, the growth in volume terms will be even higher, the sources said.

“It is clearly visible that while the Next Gen Reforms resulted in significant Bachat – increased consumption, industry has been very proactive in passing on of the GST savings to the final consumers and ensuring that there is no supply side deficiency,” sources said.  

“As GDP private consumption data will be released much later, GST taxable value serves as the most reliable real-time proxy for consumption, and the current numbers clearly indicate sustained demand expansion,” they added.