India’s net goods and services tax revenue is rebounding following the September 2025 rate overhaul, indicating resilience in collections despite initial concerns about the impact of GST 2.0.
India’s net goods and services tax revenue has begun to recover after a weak end to 2025, suggesting the country’s recent rate overhaul is not hurting collections as much as some businesses feared. Business Standard reported that the rebound started in January 2026, after net GST receipts had stayed subdued through the final months of last year following the September rationalisation of rates.
The reform, often described as GST 2.0, replaced the earlier four-tier system with two main slabs of 5% and 18%, alongside a 40% de-merit rate for selected goods. According to reports on the GST Council’s September meeting, the new structure took effect on 22 September 2025 for most goods and services, while tobacco and a few other items were treated separately. The overhaul also removed compensation cess from most products, leaving it temporarily in place for tobacco until outstanding loan and interest liabilities had been cleared, with those liabilities treated as discharged from 1 February.
India’s collection data since then points to resilience rather than a sharp drop. IBEF said gross GST collections rose 9.1% year on year in September 2025 to ₹1.89 lakh crore, helped by stronger domestic sales after the rate changes. Net revenue for that month increased 5% to ₹1.60 lakh crore, even though refunds also jumped sharply. That combination suggests the cleaner rate structure and improved refund processing may have softened the short-term disruption that often follows a tax reset.
Tax experts said the numbers support the view that the reform has so far held up revenue better than expected. Vivek Jalan, partner at Tax Connect Advisory Services, told Business Standard that collections have remained resilient despite the steep reduction in rates and slabs. While some analysts have warned that the new system could still create input tax credit mismatches for companies, the early revenue trend suggests the GST regime is adjusting without a sustained hit to the exchequer.
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