India's Goods and Services Tax revenue growth has hit a five-year low of 5.57 per cent in FY26, reaching Rs 23.32 trillion, primarily propelled by a significant surge in import revenues, indicating a widening gap between domestic and external revenue streams.
Key Points
- India's like-for-like gross GST revenue growth decelerated to a five-year low of 5.57 per cent in FY26, totalling Rs 23.32 trillion.
- Import revenues surged by 12.8 per cent, highlighting a growing disparity between domestic (up 3.27 per cent) and external revenue streams.
- Official headline gross GST collections, excluding cess, increased by 8.3 per cent year-on-year to Rs 22.27 trillion in FY26.
- GST compensation cess receipts saw a sharp 33.3 per cent drop in FY26, with the Centre discontinuing the cess from February 1, 2026.
- Maharashtra was the largest contributor to post-settlement SGST, rising 13 per cent to Rs 1.95 trillion in FY26, while several states experienced weaker momentum.
A like-for-like analysis of gross goods and services tax (GST) revenues, factoring in compensation cess receipts, shows that growth slowed to a five-year low of 5.57 per cent in 2025-26 (FY26) to Rs 23.32 trillion from Rs 22.09 trillion in FY25.
Import revenues, however, surged 12.8 per cent, highlighting a widening gap between domestic (up 3.27 per cent) and external revenue streams.
On the official headline basis, gross collections rose 8.3 per cent year-on-year (Y-o-Y) to Rs 22.27 trillion from Rs 20.56 trillion (excluding cess) recorded in FY25.
The standalone figures for April, released by the government on Friday, revealed that gross revenues from GST increased 8.7 per cent Y-o-Y during the month.
It hit a record high of Rs 2.42 trillion compared to Rs 2 trillion in March (excluding cess).
Further, net collections rose 7.3 per cent to reach Rs 2.11 trillion during the first month of FY27.
Deceleration in Indirect Tax Receipts
The FY26 numbers mark the lowest gross receipts from indirect tax since the 7 per cent contraction recorded in 2020-21.
It underscored 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.
It stated that compensation cess is continuing as a transitory arrangement, hence the growth rate is adjusted to ensure comparability across the years.
After adjusting both gross collections and refunds to include cess, net GST revenue inched up 4 per cent to Rs 2.03 trillion.
This comes 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 at a stronger 7.1 per cent to Rs 19.35 trillion in FY26, even as refunds increased 17.8 per cent to Rs 2.92 trillion.
Compensation Cess and Revenue Breakdown
On the other hand, the GST compensation cess receipts netted a sharp 33.3 per cent drop to Rs 99,039 crore in FY26 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 financial year's gross revenue breakdown highlighted that import-driven GST collections have been a major driver of the overall growth.
Integrated Goods and Services Tax (IGST) from imports jumped 14.1 per cent in FY26 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 at a subdued 6.4 per cent Y-o-Y to Rs 16.32 trillion from Rs 15.34 trillion in FY25.
State-wise Performance and Refunds
Within this, 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 in FY26.
Integrated GST (IGST) on domestic transactions was up more moderately at 5.4 per cent in FY26.
The analysis showed that taken together with cess, import revenues rose 12.8 per cent in FY26 to Rs 6.01 trillion from Rs 5.33 trillion in FY25.
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 from 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 to Rs 1.64 trillion in FY26 from the Rs 1.32 trillion refunds 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 FY26.
In absolute terms, Maharashtra emerged 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.
