Finance ministry officials are expecting gross GST (goods and service tax) revenue growth, on a monthly basis, to reach 9 percent, by the end of March 2026, and reflect in April numbers, aided by strong consumption and ease of compliance.
According to two senior officials, the monthly growth figure of GST collections may remain subdued till February, and March may see a major uptick in economic activity as is the case every year. This would take collections growth (reflected in April number) to rise above 9 percent during the month.
“The collections will take some more time to stabilise. Achieving a pre-cuts growth figure (in monthly collections) may happen only during the end of the current financial year,” the first official told Moneycontrol.
In November, gross GST collections grew merely 0.7 percent year on year (YoY), at Rs 1.7 lakh crore. The growth was modest as compared to the earlier months as November was the “first full month” which reflected the impact of reduced tax rates–introduced on September 22 on the recommendation of GST Council, the first person added.
In October, GST collections growth stood at 4.6 percent, and in April-September of FY26, the growth rate averaged 9.8 percent.
On September 22, GST rates on over 350 items—mainly daily use items and consumer durables–were slashed. Most of the items in the 28 percent slab earlier were shifted to the 18 percent slab, and those in the 12 percent slab were shifted to the 5 percent slab.
Also, on the same day, the government eased several compliance measures, specifically aimed at bringing more small businesses under the GST net. For instance, the government introduced an automated system of registration, aimed at granting GST registration to new businesses in only 3 days, which took weeks earlier.
“Collections to gain momentum from April”
“March is always an exceptional month because businesses settle accounts and pay pending taxes. So, March may show some growth revival (in collections). From April onwards, collections will gain momentum,” the second official said.
Typically, every financial year, businesses, while finalising their accounts for the year, have to undertake reconciliation and financial closure. This often results in additional, year-end tax payments and clearance of any pending dues or backlogs to align their books before the fiscal year ends, which boosts the tax revenue reported in April.
Additionally, companies often engage in a strong final push for sales, invoicing, and dispatch of goods and services in March to meet their annual targets, book revenues, and exhaust budgeted funds. This increased commercial activity directly translates into higher GST mop-up.
“April usually shows exceptional growth because it reflects the transactions done in March, when companies push supplies to meet their annual targets,” the second official noted.
The officials explained that so far, as reflected in the October and November data, consumption “has not picked up” in the way that was expected after the GST rate cuts.
“Demand won’t increase proportionately just because taxes are reduced. Take the example of cars—we reduced the tax on cars, but that doesn’t mean demand will rise in proportion to the tax cut. There are many factors that push demand. A person will buy a car only if there is a need and finance available,” said the second official.
“Easing compliance to boost mop-up”
According to experts, reduction in compliance is likely to play a “meaningful role” in supporting higher GST collections which will be evident in times to come.
As lower barriers, simpler structures, and better administrative processes encourage more businesses to register and comply, the formal taxpayer base expands, which improves tax remittance reliability and reduces evasion, they say.
“The fact that despite tax-slab rationalisation and lower rates, gross GST collections remain broadly stable suggests compliance improvements and base widening are offsetting per unit rate reductions,” an tax expert said.
Another tax expert said that faster automated registrations for small and low-risk taxpayers are accelerating formalisation; while automated refunds, including the provisional release of 90 percent of eligible claims, have improved liquidity, especially for exporters, which is already reflect in recent GST collections data.
The GST 2.0 reforms introduced an automated refund facility for exporters to increase their working capital, on an immediate basis. Under CGST Act, exporters can now receive 90 percent of their eligible refund claim quickly – called provisional refund – as it is sanctioned before the detailed, final manual scrutiny is completed.
The remaining 10 percent is released only after the complete verification is done by the tax officer. The whole process was done manually earlier.
“When registration norms are streamlined, return processes become more automated, and refunds flow on time, taxpayers, particularly MSMEs, face fewer roadblocks and naturally move towards timely, accurate filing. This improved liquidity cycle boosts business output and directly enhances taxable turnover,” he added.
Another tax expert highlighted that in April-November, the year-on-year (YoY) growth has been 8.9 percent at the gross level and 7.3 percent after factoring in refunds (which have grown by over 20 percent).
“With a positive trend in consumption and overall economic uplift, GST collections should steadily increase, largely neutralising the impact of GST cuts. Nine percent YoY seems a possibility, if this trend continues in the last four months of this fiscal year,” he added.
