Gross revenues from the goods and services tax (GST), when measured on a like-for-like basis by including cess, grew at a five-year low of 5.57 per cent in Fiscal Year 2025-26 (FY26) to Rs 23.32 trillion from Rs 22.09 trillion recorded in FY25, even as import revenues surged 12.8 per cent, highlighting a widening gap between domestic (up 3.27 per cent) and external revenue streams.
The FY26 numbers mark the lowest gross receipts from the indirect tax since the 7 per cent contraction recorded in 2020-21, underscoring a clear deceleration after several years of strong double-digit growth.
Since November 2025, the Finance Ministry has separated cess receipts from the overall GST tally, stating the compensation cess is continuing as a transitory arrangement; hence, the growth rate is adjusted to ensure comparability across the years. On the official headline basis, gross collections rose 8.3 per cent year-on-year to Rs 22.27 trillion from Rs 20.56 trillion (excluding cess) recorded in FY25.
After adjusting both gross collections and refunds to include cess, net GST revenue inched up 4 per cent to Rs 2.03 trillion after accounting for Rs 2.98 trillion in refunds (up 17.9 per cent) in the year marking the rollout of the restructured GST regime.
However, excluding cess, net collections grew a stronger 7.1 per cent to Rs 19.35 trillion, even as refunds increased 17.8 per cent to Rs 2.92 trillion.
On the other hand, GST compensation cess receipts netted a sharp 33.3 per cent drop to Rs 99,039 crore from Rs 1.49 trillion recorded a year earlier. The growth rate in FY25 stood at 5.7 per cent. The Centre discontinued the compensation cess from February 1, 2026.
A disaggregated view of the fiscal year’s gross revenue breakdown highlighted that import-driven GST collections have been a major driver of overall growth. Integrated Goods and Services Tax (IGST) from imports jumped 14.1 per cent to Rs 5.95 trillion, contributing to overall gross IGST growth of 9.4 per cent at Rs 12.31 trillion.
Domestic gross revenue grew a subdued 6.4 per cent year-on-year to Rs 16.32 trillion from Rs 15.34 trillion recorded in FY25. Within this, the Central Goods and Services Tax (CGST) grew 7.3 per cent to Rs 4.44 trillion and State Goods and Services Tax (SGST) rose 6.6 per cent to Rs 5.51 trillion. Integrated GST (IGST) on domestic transactions grew more moderately at 5.4 per cent.
The analysis showed that, taken together with the cess, import revenues rose 12.8 per cent to Rs 6.01 trillion, up from Rs 5.33 trillion in the previous financial year, while domestic gross revenues grew a modest 3.3 per cent to Rs 17.30 trillion.
At nearly Rs 2.92 trillion, refunds to taxpayers (excluding cess) swelled 17.8 per cent higher than FY25, at a pace that was more than twice that of gross growth. This was led by refunds on domestic transactions, which surged 23.8 per cent year-on-year to Rs 1.64 trillion, from Rs 1.32 trillion refunds effected in FY25. Refunds on imports rose 10.9 per cent to Rs 1.28 trillion.
State analysis revealed that Haryana led the state-wise post-settlement cumulative SGST growth at 22 per cent. In absolute terms, Maharashtra emerged as the biggest contributor, with post-settlement SGST rising 13 per cent in FY26 to Rs 1.95 trillion. Karnataka posted 5 per cent growth to Rs 87,256 crore, Gujarat increased 10 per cent to Rs 80,823 crore, and Tamil Nadu rose 3 per cent to Rs 78,117 crore.
At the same time, several states saw weaker momentum: Jharkhand’s post-settlement SGST fell 12 per cent, Chhattisgarh declined 14 per cent, Odisha dropped 9 per cent, and Jammu and Kashmir slipped 8 per cent.
Overall, as many as 12 states recorded negative growth in GST collections, while among those that expanded, 16 reported only single-digit increases, pointing to uneven gains not only across revenue sources but also across states.
“While GST collections in FY26 have been stable despite the rate rationalisation exercise in September 25, it is essential that the next wave of GST policy changes focus on the monthly divergence in collections across large producing and consuming states by undertaking a sectoral analysis of the GST collections,” an tax expert said.
He reckoned that this would likely provide several decision-making inputs for policymakers and that acting on them at the beginning of FY27 would enable robust collections during the current financial year.
