GST Rate Cut: India’s gross Goods and Services Tax (GST) collections in October 2025 increased by 4.6% compared to the previous year, reaching approximately ₹1.96 lakh crore. This increase comes amid the reduction in GST rates on approximately 375 items from September 22nd, which was seen as the beginning of the festive season. Domestic demand picked up during this period, while tax collections on import-based goods also increased.
Lower Rates and Higher Consumption
Following the reduction implemented on September 22nd, GST rates were reduced on many everyday items, from kitchen consumables to electronics and automobiles. Despite this, collections increased in October. This is believed to be due to consumers postponing purchases after the announcement of the reduction, and as the festive season approached, they spent extensively. Thus, the revival of consumption, despite the rate cut, boosted collections.
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Domestic Sales Revenue
According to the report, domestic sales revenue grew by 2% to ₹1.45 lakh crore, while GST collections related to imports increased by 13% to ₹50,884 crore. Thus, import-based taxes saw a relatively sharp increase.
Increase in Refunds
GST refunds jumped 39.6% year-on-year to ₹26,934 crore in October. However, net GST revenues totaled approximately ₹1.69 lakh crore, a marginal increase of only 0.2% compared to the previous year. Thus, while the increase in collections was substantial, net revenues were constrained by the significant increase in refunds and other deductions.
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Strong Demand and Improved Compliance
Abhishek Jain, Head of Indirect Tax at investment firm KPMG India, said that higher gross GST collections are a sign of a strong festive season, improved demand, and early adoption by businesses of the new rate structure. Mahesh Jaisingh, Partner at Deloitte India, attributed the increase to a combination of GST rate changes and festive shopping. Furthermore, states/union territories such as Arunachal Pradesh, Nagaland, Lakshadweep, and Ladakh have seen significant increases in collections, indicating a broad-based recovery.
