How does GST growth reinforce the structural strength of India’s formal economy?
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Synopsis
As India continues its journey towards becoming a global economic powerhouse, recent GST collection figures reveal an encouraging growth trend. Experts believe that this momentum could lead to significant year-on-year growth, making the upcoming fiscal developments crucial for the country's economy.
Key Takeaways
- India's GST collections saw a **6.1% increase** in December 2025.
- Strong economic activity reflects a robust formal economy.
- Refunds are up **30.9% YoY**, highlighting business liquidity priorities.
- Key states like Maharashtra and Gujarat are major contributors to GST revenues.
- The government aims for continued growth through GST reforms in the upcoming budget.
New Delhi, Jan 1 (NationPress) Despite significant reductions in GST rates, the over 6% growth in gross monthly collections for December is a positive sign, remarked industry experts on Thursday.
India’s GST (Goods and Services Tax) collections saw a 6.1% rise, totaling ₹1,74,550 crore in December 2025, compared to ₹1,64,556 crore in the same month last year. This increase reflects heightened economic activity during the month.
“Should this trend persist throughout the remaining months of the fiscal year, achieving a YoY growth of approximately 9% is still feasible, which appears to be a target the government might be aiming for,” stated Pratik Jain, partner at Price Waterhouse & Co LLP.
Central GST collections in December climbed to ₹34,289 crore, state GST collections reached ₹41,368 crore, while integrated GST collections amounted to ₹98,894 crore.
Manoj Mishra, Partner and Tax Controversy Management Leader at Grant Thornton Bharat, mentioned that the December GST figures reinforce the structural strength of India’s formal economy, sending a positive message as India solidifies its position as the world’s fourth-largest economy, surpassing Japan.
“The composition of the collections is equally revealing; the 19.7% growth in import-related IGST indicates resilient supply chains and manufacturing momentum, while stable domestic collections signify consistent consumption,” he added.
A noteworthy highlight is the refunds, which totaled ₹28,980 crore, marking a 30.9% increase YoY, emphasizing the system’s growing focus on business liquidity, even as export refunds saw a slight 1.9% decline amid global trade challenges.
Continued strong revenues from Maharashtra, Gujarat, Karnataka, and Haryana play a crucial role in this landscape.
The government collected ₹4,551 crore through the GST compensation cess, which remains a temporary measure until the complete loan and interest obligations are cleared. The total collection for the full year stood at ₹88,385 crore, compared to ₹1.1 lakh crore in 2024.
“As the Budget for 2026–27 approaches, these trends bolster the argument for a policy focus on enhancing the GST 2.0 reforms, which include end-to-end compliance automation, reduction of unnecessary litigation, and a calibrated credit framework to sustain growth without jeopardizing revenue certainty,” Mishra concluded.
Point of View
The recent GST growth figures highlight the resilience and structural strength of India's economy, positioning it effectively on the global stage. The steady increase in collections signals positive economic activity, reinforcing the government's strategies in fiscal management.
NationPress
10/01/2026
Frequently Asked Questions
What was the GST collection for December 2025?
The GST collection for December 2025 was ₹1,74,550 crore, reflecting a **6.1% increase** compared to the previous year.
How much did the central GST collections rise in December?
Central GST collections rose to ₹34,289 crore in December.
What does the growth in GST collections indicate?
The growth in GST collections indicates an increase in economic activity and reinforces the structural strength of India's formal economy.
What impact do refunds have on GST collections?
Refunds totaled ₹28,980 crore, marking a **30.9% increase YoY**, which is crucial for maintaining business liquidity.
What is the significance of the upcoming Budget for 2026–27?
The upcoming Budget is significant as it will address the trends in GST collections and focus on enhancing GST reforms for sustained growth.
