GST collection may see a hit in Sept-Oct, but expect strong rebound soon
Experts felt that the dip in collection should not be seen as a negative
As consumers postponed purchases in August after Prime Minister Narendra Modi announced goods and services tax (GST) rate cuts, GST collection in September is expected to take a hit, data for which will be out on October 1.
Experts said some of the hit would have spilled over to October but it will be a temporary dip and the collection would pick in the subsequent months.
Gross GST collection in April to August period has been over ₹10 lakh crore showing a growth of nearly 10 per cent. However, post-refund net collection reached ₹8.78 lakh crore with a growth of around 9 per cent.
Prime Minister Modi, in his Independence Day speech, announced that next-generation GST reforms by Diwali will reduce taxes on daily essentials. This led to deferment of purchase and resulted in lower growth of over all sales.
For examples, retail sales of automobile recorded a modest 2.84 per cent in August as compared to August last year. On month-to-month basis, sales were almost flat. It may be noted that automobile has a major share in GST collection.
According to Sandeep Sehgal, Partner-Tax, AKM Global, after the PM’s announcement on GST rate cuts, many people held back their purchases, waiting for prices to come down. Because of this, GST collections for September, which will be out on October 1, could be slightly lower. “October may also see a dip, as the new lower rates come into effect and businesses adjust their pricing,” he said.
Revenue loss
However, experts felt that the dip in collection should not be seen as a negative. According to Rahul Shekhar, Partner at NangiaNXT, it is estimated that GST 2.0 could lead to an average annual revenue loss of nearly ₹85,000 crore, with the immediate impact in FY26 at about ₹45,000 crore. However, this is not necessarily negative for the economy.
“The lower tax incidence increases household purchasing power, leaving more disposable income to fuel stronger consumption,” he said while adding that short-term GST collections in September and possibly October may appear subdued as consumers delayed purchases in anticipation of lower rates, but the rebound would be swift.
Echoing the sentiment, Punita Bhuchar, Partner at Deloitte India said that while the phasing out of the compensation cess will remove one stream of revenue, the rationalisation of GST rates offers a strong countervailing force. By simplifying slabs and lowering effective taxes on essentials as well as aspirational goods, it is expected to spur consumption, improve compliance, and create buoyancy in the tax base.
System resilient
“We are already witnessing clear resilience in the system — India’s gross GST collections touched a record ₹22.08 lakh crore in FY 2024-25, marking a healthy 9.4 per cent year-on-year growth. Even August 2025 alone yielded ₹1.86 lakh crore. These figures reflect underlying strength. With rationalisation, elasticity should work in favour of higher collections, especially as growth and consumption pick up,” she said.
Shekhar opines with an estimated ₹5.5 lakh crore consumption boost, owing to GST rate rationalisation and income tax cut, the government could still net about ₹52,000 crore in fresh revenues.
Bhuchar reminded that the rate adjustments in 2018-19 were followed by a material improvement in average monthly revenues. “This precedent gives confidence that the current reform can similarly unlock a revenue dividend, as demand and compliance respond positively,” she said.
Published on September 28, 2025
