Twenty out of 36 states and Union Territories (UTs) in India saw their Goods and Services Tax (GST) collections contract in October, marking the weakest monthly performance so far in FY26 as businesses adjusted to the new GST 2.0 rate structure.
How steep was the GST slowdown in October?
State GST collections grew just 2 per cent year-on-year in October, while gross GST revenue rose 4.6 per cent — the slowest pace in several months. The moderation followed strong momentum in the first half of the financial year (April–September), when growth peaked above 13 per cent in May.
Major states and UTs that saw collections decline included Himachal Pradesh (-17 per cent), Jharkhand (-15 per cent), Uttarakhand (-13 per cent), Andhra Pradesh (-9 per cent), Madhya Pradesh (-5 per cent), Rajasthan (-3 per cent) and Delhi (-1 per cent), reflecting a broad-based slowdown across consumption and industrial centres.
Even large contributors such as Haryana (0 per cent), Maharashtra (3 per cent), Tamil Nadu (4 per cent) and Gujarat (6 per cent) posted muted growth — significantly lower than the double-digit increases seen earlier in April and May. Karnataka and Telangana, which had recorded subdued numbers in September, rebounded with 10 per cent growth in October.
Why did GST collections moderate after September?
Officials and experts attributed the dip to the timing of the GST 2.0 rate rationalisation, effective from September 22. Since monthly GST inflows reflect activity from the preceding month, the October data captured the period when many businesses delayed invoicing in early September to pass on the lower rates to consumers.
The GST 2.0 framework was first announced by Prime Minister Narendra Modi in his Independence Day address on August 15.
A senior state government official said it was too early to draw conclusions from one month’s data. “In September, only the last eight days reflected the new rates. Before that, many businesses held back sales in anticipation of the cuts,” the official said. “Even with that timing issue, September’s collections were decent. We should wait for the November numbers to see whether this moderation persists, though our expectation is that growth will improve as festive demand flows through.”
What do tax experts say about the trend?
An tax expert, said many sectors, especially automobiles and other high-value goods, saw deferred purchases in the first half of September in anticipation of the rate cuts. “Only the last eight days of September captured post-rate-cut demand, making October appear softer,” he said.
Another tax expert added that analysing sector-wise GST collections would help identify patterns behind monthly fluctuations. “Understanding the sectoral trends will assist in fiscal planning and policy formulation at the state level,” he said.
Currently, the GST Network (GSTN) does not release sector-wise collection data, limiting granular analysis of revenue trends.
Which regions performed better despite the dip?
Experts noted that India’s five major IT-service hubs — Maharashtra (3 per cent), Karnataka (10 per cent), Tamil Nadu (4 per cent), Telangana (10 per cent) and Haryana (0 per cent) — avoided contraction, buoyed by stable service-sector activity even as goods-producing states saw sharper slowdowns.
A few smaller regions bucked the overall trend. Arunachal Pradesh (44 per cent) and Nagaland (46 per cent) in the North-East, along with Ladakh (39 per cent), Andaman & Nicobar Islands (30 per cent), and Dadra & Nagar Haveli & Daman & Diu (10 per cent), recorded strong growth in October.
Source from: https://www.business-standard.com/economy/news/gst-collections-fall-in-20-states-october-2025-125110401650_1.html
