GST mop-up climbs 6.1% in December on import strength, refunds cap net gains

India’s goods and services tax (GST) collections showed steady momentum in December 2025, rising 6.1% year-on-year to Rs 1.75 lakh crore, supported by strong import-related revenues and stable domestic economic activity. Collections stood at Rs 1.64 lakh crore in the same month last year, according to data released by the government on Thursday.

The December performance followed a relatively muted showing in November, when gross GST collections edged up just 0.7% to around Rs 1.70 lakh crore, indicating that revenue growth remains uneven across months. Despite this volatility, the broader trend remains positive. On a year-to-date basis (April–December 2025), gross GST collections climbed to Rs 16.5 lakh crore, registering a robust 8.6% annual growth.

Net GST revenue, which accounts for refunds, stood at Rs 1.45 lakh crore in December, marking a 2.2% increase over the previous year. Cumulatively, net collections for the first nine months of the financial year reached Rs 14.25 lakh crore, up 6.8% year-on-year, reflecting sustained compliance and tax buoyancy.

Refund outflows, however, rose sharply during the month. Total GST refunds amounted to Rs 28,980 crore, up nearly 31% from a year ago. Domestic refunds surged 62%, while export-related refunds dipped marginally by 1.9%. The sharp rise in domestic refunds weighed on net collections and partly explains the slower growth in net revenues compared to gross collections.

A closer look at the composition of GST receipts shows a clear divergence between domestic and import-linked taxes. Domestic GST revenue grew a modest 1.2% year-on-year to Rs 1.22 lakh crore in December, suggesting cautious consumption trends. In contrast, GST from imports jumped 19.7% to Rs 51,977 crore, underscoring resilient trade activity and higher customs-linked tax inflows.

The compensation cess, which continues as a transitional levy until outstanding loans and interest obligations are repaid, fell sharply. Net cess revenue dropped to ₹4,238 crore in December, compared with Rs 12,003 crore a year earlier, a decline of nearly 65%. The fall reflects both lower cess accruals and higher adjustments through refunds.

State-wise data revealed a mixed picture after settlement. Several northeastern states posted moderate gains, with Arunachal Pradesh, Manipur and Meghalaya recording growth of 7–8%, while Assam grew 5%. On the other hand, Jammu and Kashmir, Punjab and Ladakh saw contractions, highlighting regional disparities in economic activity.

Among larger states, Maharashtra (15%), Gujarat (12%) and Haryana (16%) led with strong growth, while Tamil Nadu (8%), Karnataka (5%) and Uttar Pradesh (5%) posted moderate gains. West Bengal saw marginal growth of 1%, while Madhya Pradesh recorded a 2% decline. Union Territories also showed divergence, with Chandigarh growing 2% and Lakshadweep witnessing a sharp 37% contraction.

Commenting on the data, Vivek Jalan, Partner at Tax Connect Advisory Services, said the apparent disconnect between strong GDP growth and muted domestic GST collections reflects the composition of recent economic expansion. “The GDP crossing 8% and net GST domestic revenues degrowing by 5.1% can be explained by the fact that GDP growth has a major component of increased government expenditure which, when discounted, results in muted GST collections,” he said. Jalan added that the consumption impact of government spending typically plays out with a lag, and GST collections in FY26–27 are likely to revive sharply.

Jalan further noted that GST 2.0 rate reductions have also weighed on December collections. “The rate cuts have created or deepened an inverted duty structure in sectors such as packaging, farming and pharmaceuticals. Taxpayers in these sectors applied for inverted duty refunds in November and received them in December, which further impacted GST collections,” he said.