November GST collection wilting to 12-month low indicates missing sales volume despite big rate cut: Experts
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Two months after the mega rate rationalisation reforms, Goods and Services Tax (GST) collections slowed to a 12-month low of ₹1.7 lakh crore in November 2025, down from ₹1.96 lakh crore in the previous month, according to the latest government data.
The latest GST figures come as a setback after October showed tax collections rising 4.6% year-on-year to ₹1.96 lakh crore in October 2025. The GST collection this month increased by a marginal 0.7% year-over-year, reaching ₹1.69 lakh crore in November 2024. The net GST collection surged 1.3% to ₹1.52 lakh crore from ₹1.50 lakh crore in the same period last year, on a 1.5% reduction in domestic revenue.
The gross domestic GST collection has also shown a decline of 2.3% compared with the same numbers for the month of November 2024. After the government trimmed GST slabs from five to four, and also introduced rate cuts on at least 375 items effective September 22, 2025, the gross domestic revenue also dipped 2.3% to more than ₹1.24 lakh crore.
Notably, November GST data shows the actual business transactions, which were carried out in October 2025 after the GST 2.0 reforms were introduced in September.
October’s cess revenue also fell more than 69% year-on-year to ₹4,006 crore from ₹12,950 crore in the same month previous year, the data shows. Comparing the GST data for the first eight months of FY26 shows 9% growth to ₹14.75 lakh crore from ₹13.55 lakh crore in the same period last year.
November 2025
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Commenting on the potential reasons behind the slowdown in tax collection for November, Karthik Mani, Partner- Indirect tax at BDO India, said the drop in gross domestic GST collection is clearly due to the effect of GST rate reductions coming into effect from 22 September 2025. “It was hoped that the increase in volume of purchases due to increased affordability from the rate reduction, that too, in the festive period of Diwali, which traditionally sees significantly high demand, would offset the drop in revenue due to GST rate reductions, but instead, there is a reduction in the Gross Domestic GST Collections.”
He also stated that previously, the compensation cess collection was included in the GST collection data; however, the current data treats the cess separately. “If the cess is also considered as a part of gross domestic GST collection, the numbers would show a further dip, since the cess collection has reduced by two-thirds, mainly due to only tobacco now being subject to the cess and other items like aerated beverages and motor vehicles going outside the ambit of cess,” said Mani.
Economists also highlight that GDP growth driven by government spending hasn’t translated into stronger GST receipts. Vivek Jalan, Partner at Tax Connect Advisory Services, stresses that one needs to understand a bit of economics to understand the muted GST consumption in the backdrop of a robust GDP tailwind. “GST collections is a function of the consumption in the economy, whereas GDP is a function of government expenditure, investment and trade surplus, also, along with consumption. The increase in GDP had a major component of increased government expenditure, which, when discounted, gives a muted GST collection.”
India’s real GDP picked up pace to grow 8.2% in Q2FY26 compared with 5.6% for same quarter last year. The number significantly exceeded street expectations of 7.3% growth and was partially helped by the lower GDP deflator.
Jalan said the impact of the GST 2.0 rate reduction explains a gross GST collections increase of only 0.7% YoY. “It seems that the economy has some work to do in the balance part of the year to keep the fiscal deficit in check.”
GST 2.0 has also created or deepened an inverted duty structure in many sectors, like packaging, farming, pharma, etc. "All such taxpayers have applied for inverted duty refunds in November 2025. These refunds would be sanctioned in December 2025 in all probability, and hence the increase in consumption has to balance this impact too, going forward to continue the GST bandwagon,” believes Jalan.
Notably, during the launch of the GST 2.0 regime, while the government's estimates of likely revenue foregone due to GST rate rationalisation were ₹48,000 crore, many research agencies estimated losses to the tune of ₹10 lakh crore.