GST collections jump 22.9% to Rs 2.31 lakh crore in October as festive demand
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India's GST collections in October reached ₹2.31 lakh crore, reflecting a 22.9% year-on-year increase. Strong consumption trends are indicated by rising passenger car sales and record digital payments. Power consumption also surged nearly 22% compared to last year, further emphasizing economic strength. Despite a high inflation rate of 5.5%, demand has remained robust, supporting growth forecasts. Analysts suggest this growth aligns with leading indicators of a consumption-driven economy.
New Delhi: India's gross goods and services tax (GST) collections surged 22.9% year-on-year in October to ₹2.31 lakh crore, suggesting strong festival-season consumption despite rising inflation, higher interest rates and an adverse global environment.Other high-frequency data backed India's strong consumption story. Passenger car sales soared about 14% to an all-time high of over 525,000 units last month.
Also read: GST reforms: Easier registration for small e-commerce sellers, faster refunds to take effect Nov 1
Digital payments hit a record 25.47 billion in October, up 23%, while transaction value rose 16% to ₹31.53 lakh crore, according to National Payments Corporation of India data. Power consumption surged nearly 22% in October from a year earlier, hitting 160 billion units. Diesel sales surged 11.7% on-year in the month.
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However, petrol sales grew a moderate 3.1%, while jet fuel and LPG sales declined.
Net GST collections, after adjusting for refunds, rose 25.6% to ₹2.03 lakh crore in October. Total refunds increased 6.5% during the month.
"This robustness is expected to continue as it ties in with leading macroeconomic indicators, all of which point to a domestic consumption-driven economy growing at a steady pace, not significantly impacted by global headwinds," said MS Mani, partner, Deloitte India.
The data suggests a strong start to the third quarter of the current fiscal year. India's economy grew at a faster-than-expected 7.8% in the June quarter, triggering a raft of upgrades by international agencies.
The IMF raised India's growth forecast for FY27 to 7%, up from its earlier estimate of 6.4% in July.
Rise in fall season Demand hasn't been dented by high inflation and interest rates, and a poor monsoon, the data suggest.
Consumer inflation rose to a 23-month high of 5.5% in September from 4.8% in August.
The RBI last month raised the policy repo rate by a quarter of a percentage point to 5.5% while changing its stance to "calibrated tightening," seeing evidence of broadening inflation. The central bank Monetary Policy Committee's next meeting is scheduled for December 2-4.
GST collections
Domestic GST collections rose 15.8% to ₹1.59 lakh crore, while that from the levy on imports grew 42.2% to ₹72,246 crore.
Average monthly gross GST collection for current fiscal year is ₹2.11 lakh crore. "The October numbers provide a positive signal for revenue mobilisation and reinforce the growing maturity of India's GST framework," said Abhishek Jain, partner and national head, indirect tax, KPMG in India.
Most of the states posted double-digit growth in GST collections. "The excellent growth in GST collections demonstrated by the eastern and north eastern states ranging from 10% in Odisha to 47% in Assam while traditional manufacturing heavyweights like Maharashtra (13%), Gujarat (16%), Karnataka (18%), Haryana (17%) continue their collections growth as well," Mani said.
The sustained growth in import-linked collections underscores the need to further push domestic manufacturing capabilities, said Saurabh Agarwal, tax partner, EY India. He suggested recalibrating Production Linked-Incentive schemes in sectors with unutilised budgets to better support domestic production and the broader objective of an Atmanirbhar Bharat.
Manoj Mishra, partner Grant Thornton Bharat, however, said import collections can also be influenced by changes in import volumes, commodity prices and the value of goods imported.
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Figures reflect the source report and its stated period. This article is for information and is not investment advice.
