GST taxable supply rises 25.8% as effective tax rate falls: What the numbers say about GST 2.0

The Goods and Services Tax (GST) regime has seen a sharp expansion in taxable supplies over the past year, even as the effective domestic tax rate has declined, highlighting the broadening of the tax base under GST 2.0.

According to the outcomes of the 57th GST Council meeting, monthly taxable supply increased from ₹40.19 lakh crore to ₹50.58 lakh crore, marking a 25.8% rise over the period. Consumer supplies also increased 26.7%, from ₹5.98 lakh crore to ₹7.58 lakh crore a month.

The increase in the value of taxable supplies has, however, not been accompanied by a proportionate rise in the effective tax rate. The effective domestic tax rate fell from 14.55% to 13.13%, indicating that a larger volume of economic activity is being captured even at a lower effective rate.

Tax base expands despite lower effective rate

The numbers point to a GST system that is generating greater taxable economic activity while reducing the average tax burden reflected in the effective rate.

Gross tax liability increased from ₹5.85 lakh crore to ₹6.64 lakh crore, a rise of 13.6%. This increase was significantly lower than the 25.8% expansion in taxable supply, consistent with the decline in the effective domestic tax rate.

GST revenue growth has nevertheless remained strong. Revenue is estimated to have increased 11% in FY27, while GST collections during June-August 2026 grew 14.7%.

The data suggest that the GST regime is increasingly relying on a broader tax base and improved compliance rather than simply higher effective rates to support revenue growth.

Compliance reforms accompany expansion

The GST Council has also approved a series of measures aimed at making compliance more technology-driven and reducing friction for taxpayers.

Around 61% of GST registrations are now automated, with the remaining applications going through officers. The Council has also streamlined the registration application and introduced faster processing of amendments.

Refund processing is set to become quicker, with the acknowledgement period being reduced from 15 days to 10 days. The system will also sanction 90% of refunds within three working days on a risk-based basis.

Other measures include faster closure of GST registrations, simplified filing for smaller taxpayers and restrictions on unnecessary checks of goods in transit.

What the numbers indicate

The combination of higher taxable supply, lower effective tax rates and continued revenue growth provides an important measure of how GST 2.0 is evolving.

Rather than relying primarily on higher rates, the latest data point towards a system focused on widening the tax base, improving compliance and using technology to identify mismatches and potential tax evasion.

With the Council also retaining the existing rate structure at the latest meeting, the focus is increasingly shifting from rate changes to simplifying compliance, improving enforcement and making the GST system more efficient.