Despite a sharp rise in September GST collections, experts warn that recent accounting reclassifications and exclusions suggest the underlying revenue growth is weakening, raising questions about the true fiscal health.
India’s GST receipts rose sharply in September, but the headline number may flatter the underlying trend. Gross collections climbed 14.7% from a year earlier to more than ₹2.03 lakh crore, helped by firmer domestic spending and a 26% surge in revenue from imports. After refunds, net collections increased 18.1% to above ₹1.76 lakh crore, according to the latest figures. For the first six months of FY27, gross GST collections were up 11.6% at more than ₹12.46 lakh crore, while net collections advanced 10.4% to ₹10.66 lakh crore.
Yet analysts say the headline figures are becoming harder to read because they now mix tax streams that were previously recorded differently. The Business Standard reported earlier this year that like-for-like GST growth in FY26 slowed to 5.57%, the weakest in five years, even though the official headline increase was higher. That gap reflects the impact of compensation cess and other levies being folded into a revised tax structure, which can make current collections look stronger than the amount actually available to the exchequer. In other words, the label on the revenue line is changing as much as the revenue itself.
The reworking of the tax regime after September 2025 is central to the confusion. The compensation cess on tobacco and pan masala was removed, while those products were shifted into a new GST framework alongside additional excise duty. As Business Standard reported, December 2025 then brought net GST growth of just 2.2%, the slowest in a year, even though import-linked collections jumped 34.6%. That pattern suggests the rebound in gross receipts has been driven in part by imports and by accounting changes, not only by a broad-based improvement in domestic demand.
The broader concern is that the shift also affects how much revenue is shared with states. According to the analysis cited by Business Today, net GST revenue as a share of gross domestic product slipped to 5.7% in FY26 from about 6% in FY24 and FY25, below the pre-GST average of around 6.2%. Gross collections still look healthy on paper, but once cess, excise and refund adjustments are stripped out, the growth rate is much less impressive. The result is that GST performance now has to be judged on two separate questions: whether the tax system is raising more money, and whether those gains are being measured in a way that reflects the true fiscal position.
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