'Sleight of the left hand to discredit GST numbers': SBI economist hits back at Garg’s 4% claim

State Bank of India (SBI) Group Chief Economic Advisor Soumya Kanti Ghosh has pushed back against former Finance Secretary Subhash Chandra Garg’s assessment of India’s GST collections, arguing that adding the GST Compensation Cess to FY26 figures does not provide an “apple-to-apple” comparison with collections under the restructured GST regime. Ghosh said the apparent slowdown is also distorted by base effects and pointed to double-digit growth in GST collections during the first five months of FY27.

Garg, in a column in a national daily, had questioned the government’s interpretation of the August 2026 GST numbers. The government reported gross GST collections of Rs 1,99,853 crore, up 14.8% from Rs 1,74,116 crore a year earlier. Garg argued that the comparison excluded the Compensation Cess collected in August 2025.

Adding Rs 11,782 crore of cess to last year’s gross collection takes the comparable base to Rs 1,85,897 crore, bringing August 2026 gross GST growth down to 7.51%, according to his calculation.

Garg also pointed to the five-month FY27 picture. While official gross GST collections grew 11% during April-August, he said comparable growth falls to 4.08% after including the cess collected last year. On a net basis, he calculated growth at only 1.3%.

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Not ‘apple-to-apple’

Ghosh, however, said the comparison overlooks the fundamental change in the GST structure. The Compensation Cess was introduced as a temporary levy during the GST transition and was discontinued from April 2026 after the restructuring of GST rates. Cess applicable to several products was subsumed into the new GST framework.

“Why include GST series from old numbers that include compensation?” Ghosh asked, arguing that the old and new series should not simply be combined to assess current GST performance.

He said using the old series to claim that GST growth has slowed to around 4% amounts to a misleading interpretation of the current revenue trend.

May numbers hit by high base effect

Ghosh also highlighted a significant base-effect issue, particularly in May. GST growth under the old series was -3.4% in May 2026, but he said May 2025 had an unusually high base because of a one-off telecom spectrum-related payment of around Rs 10,000 crore.

According to Ghosh, the high base had a substantial impact on the five-month average cited by critics. He argued that the May figure therefore needs to be viewed separately rather than used to characterise the broader GST collection trajectory.

FY27 GST collections

Ghosh said GST collections actually maintained a strong growth trajectory during FY27. Collections in the first five months grew by an average 11.2%, higher than Q1 nominal GDP growth of 10.3%.

Even under the old series, including cess, collections grew by an average 6% during April-August 2026, excluding May, he said.

States to gain Rs 1.43 lakh crore under revised framework

The SBI economist also shifted the focus to state finances, arguing that GST collections alone do not capture the impact of the tax restructuring.

With the Compensation Cess discontinued and Additional Excise Duty introduced, states are estimated to gain approximately Rs 1.43 lakh crore in FY27 over FY26, after accounting for GST collections and their share in Basic Excise Duty.

Ghosh, therefore, argued that the relevant measure is the overall revenue accruing to states, rather than a narrow comparison based on a discontinued cess. He said comparisons that ignore the restructuring of the GST framework, base effects and the broader revenue impact can give a misleading picture of India’s current GST performance.

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