Rs 2-lakh-crore GST haul in September masks a bigger import story

India’s GST collection story remained strong in September, with gross collections crossing the Rs 2-lakh-crore mark and rising 14.7 per cent year-on-year to Rs 2,03,521 crore.

Net GST collections were even stronger, rising 18.1 per cent to Rs 1,76,520 crore.

At first glance, the numbers point to robust tax collection and economic activity. But the detailed GST data tells a more complicated story. Import-linked GST grew 25.9 per cent, more than twice the 10.1 per cent growth in domestic GST. At the same time, domestic refunds fell sharply, helping net collections grow faster than gross collections.

The divergence raises an important question: How much of the GST growth reflects stronger domestic economic activity, and how much is coming from imports and changes in refunds?

Imports lead growth

Gross domestic GST revenue increased from Rs 1,25,334 crore in September 2025 to Rs 1,37,996 crore in September 2026, a growth of 10.1 per cent.

GST revenue from imports, however, jumped from Rs 52,031 crore to Rs 65,525 crore — a 25.9 per cent increase.

The difference becomes more significant when the increase in collections is examined in absolute terms.

Overall gross GST collections increased by Rs 26,156 crore over September 2025. Of this, around Rs 13,494 crore came from import-linked GST — slightly more than half of the total increase.

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That makes the composition of imports particularly important.

Abhishek Jain, Indirect Tax Head and Partner, KPMG, said, “Gross GST collections growing 14.7 per cent in September despite global headwinds is very encouraging. As import GST is up nearly 26 per cent; it’s important to see how much of that is raw materials versus finished goods.”

Jain said a detailed analysis could help determine whether the numbers point towards stronger domestic manufacturing or indicate a need for further policy support.

“It’ll be good to analyse this in detail, specifically if it signals already stronger domestic manufacturing or there is a need for further push, thereby making stronger the case for continuing and expanding schemes like PLI.”

The GST data itself cannot establish what proportion of imports consists of raw materials, capital goods or finished products. That would require detailed merchandise-import data.

Not isolated trend

The September trend is not an isolated monthly phenomenon. During April-September, gross GST collections rose 11.6 per cent to Rs 12,46,278 crore.

But domestic gross GST revenue grew only 6.1 per cent, from Rs 8,24,462 crore to Rs 8,74,366 crore.

Import GST, meanwhile, increased 27.1 per cent, from Rs 2,92,627 crore to Rs 3,71,912 crore.

That means import-linked GST accounted for roughly 61 per cent of the increase in gross GST collections during the first six months.

This does not mean that the overall GST performance is weak. Rather, it means the headline 11.6 per cent growth in gross collections cannot be read simply as an equivalent increase in domestic consumption or domestic economic activity.

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Saurabh Agarwal, Tax Partner, EY India, highlighted the same distinction: “The Rs 2-lakh-crore mark in gross GST collections, with growth of close to 15 per cent, shows that domestic demand continues to do well in spite of global pressure.”

He also pointed to the difference between domestic and import collections. “One thing worth noting is that GST on imports is growing much faster than domestic collections.”

Agarwal said the government’s production-linked incentive schemes had laid a foundation for domestic manufacturing, but argued that the import numbers warranted a fresh look at policy.

“The import numbers suggest it is time to recalibrate some of these schemes, so that the gains from this groundwork are fully realised.”

Refunds part of the story

The net GST number looks even stronger than the gross figure. Net GST collections rose from Rs 1,49,517 crore in September 2025 to Rs 1,76,520 crore in September 2026 — an increase of 18.1 per cent.

But the gap between gross and net growth is partly explained by refunds. Total refunds declined 3 per cent to Rs 27,001 crore in September from Rs 27,848 crore a year earlier.

Domestic refunds fell by 13.5 per cent to Rs 13,504 crore, while export GST refunds through ICEGATE increased 10.2 per cent to Rs 13,497 crore.

The decline in domestic refunds means more of the gross tax collection remained as net revenue during the month.

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Vivek Jalan, Partner, Tax Connect Advisory Services LLP, said this deserves monitoring. “However, domestic refunds contracted by 13.5 per cent in September, suggesting that departments may be holding back disbursements — a trend that warrants close monitoring to ensure liquidity for businesses.”

The data establishes that refunds declined. Whether that reflects administrative timing, changes in claims or other factors cannot be determined from the collection table alone.

Jalan also highlighted the resilience of collections following GST 2.0 and called for further reforms in areas including input-service refunds under the inverted duty structure and taxpayer registration.

One numerical clarification is necessary: Jalan’s supplied comment refers to net GST revenue between September 2025 and September 2026 as growing “around 7 per cent”. The government data sheet provided for this analysis shows 18.1 per cent growth in total net GST revenue for September. The 18.1 per cent figure is, therefore, the relevant number for the September year-on-year comparison.

State-wise GST growth uneven

The national headline also conceals considerable variation between states.

Maharashtra recorded 15 per cent growth in September, while Karnataka grew 16 per cent and Gujarat 17 per cent. Uttar Pradesh and Telangana recorded growth of 18 per cent each.

These are significant numbers because the states include some of India’s largest manufacturing, services and consumption centres.

But the performance was far from uniform. Haryana grew just 2 per cent, West Bengal 6 per cent, Rajasthan was broadly flat, while Tamil Nadu recorded a decline of 5 per cent.

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MS Mani, Partner, Deloitte India, drew attention to precisely this divergence. “While it is good to see large manufacturing and consuming states like Maharashtra, Gujarat, UP, Telangana and Karnataka recording strong GST collection growth exceeding 15 per cent, lower growth in Haryana (2 per cent), West Bengal (6 per cent), Rajasthan (0 per cent) and Tamil Nadu (-5 per cent) would require a detailed analysis.”

Some smaller states recorded exceptionally high percentage increases. Assam, for example, recorded 88 per cent growth, while Manipur rose 145 per cent. Such numbers need to be viewed in the context of their relatively smaller revenue bases and should not be directly equated with the performance of Maharashtra, Karnataka or Gujarat.

More to the story

Manoj Mishra, Partner and Tax Controversy Management Leader at Grant Thornton Bharat, argued that the composition of the September number matters as much as the headline.

“September GST collections are encouraging, but the headline INR 2.04 lakh crore is only one part of the story.”

Mishra highlighted the sharp difference between domestic and import-linked collections. “Gross collections grew 14.7 per cent year-on-year, with domestic GST revenue rising 10.1 per cent, while import-linked GST grew a much sharper 25.9 per cent.”

He also cautioned against treating import GST growth as an automatic indicator of stronger domestic consumption.

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“The continued strength in the import component is noteworthy, particularly against the backdrop of elevated energy prices, geopolitical disruptions and higher landed costs for globally traded commodities. It therefore provides an important boost to collections but should not be interpreted entirely as a proxy for stronger domestic consumption.”

For Mishra, the next phase of GST reform should focus on how the system works rather than simply on headline tax rates.

“The next phase of GST, therefore, is less about headline rate changes and more about making the system work better and that could provide an important foundation for sustaining the current momentum.”

Subhash Garg challenges ‘GST growth’ narrative

The strong headline numbers have also drawn a sharp counterpoint from former finance secretary Dr Subhash Chandra Garg.

In the X post supplied with the GST data, Garg wrote that total central GST receipts — comprising CGST, IGST and cess in his calculation — were Rs 81,298 crore in August. He calculated growth of just 2.92 per cent.

Garg also highlighted the five-month figure: “In five months Rs 4,36,554 crore.” He compared this with Rs 4,52,832 crore in the previous period and calculated a decline of 3.59%. His conclusion was blunt: “No GST growth bravado.”

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Garg’s figures are based on a different series from the headline gross GST collection number reported by the GST authorities. This distinction is important because the treatment of compensation cess and changes in GST rates can affect like-for-like comparisons.

His intervention, therefore, does not change the September GST collection figure of Rs 2,03,521 crore. Instead, it raises a broader question about how GST growth should be measured when the tax structure itself has changed.

What numbers say about manufacturing

The expert commentary converges around one central issue: The import component needs closer examination.

A high import-GST growth rate can reflect several things — stronger domestic demand for imported goods, higher commodity prices, increased imports of components and raw materials, greater imports of capital goods, or increased purchases of finished products.

The GST collection data alone cannot distinguish between these factors.

That is why Jain’s call to examine the composition of imports is particularly relevant to the manufacturing debate.

If the increase is primarily in intermediate goods and capital equipment, it could support the argument that domestic production capacity is expanding. If finished-goods imports are driving a significant part of the increase, the policy interpretation would be different.

Festive season could provide next test

Mani expects GST collections to remain robust as the festive season boosts consumption over the coming months.

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“With the festive season, which typically leads to higher consumption across product categories, likely to continue for the next three months, it is expected that the GST collections would continue to be robust and could lead to the annual targets being exceeded in FY26-27.”

The coming months will, therefore, provide an important test of the September trend.

The key question will not simply be whether monthly GST collections remain above Rs 2 lakh crore. It will be whether domestic GST growth accelerates, whether the import surge is increasingly linked to productive economic activity, whether refunds remain timely, and whether the gap between stronger and weaker states narrows.

For now, the September GST data offers a strong revenue-mobilisation story. But beneath the Rs 2.04 lakh crore headline is a more complex picture — one in which imports, refunds, state-level divergence and changes in the tax structure all matter.