Official sources pointed out that the structure of GST has changed now, several sectors see growth in taxable value of supplies
Even though collections from the goods and services tax (GST) remained almost flat in November, government sources indicated that the rate rationalisation of the indirect tax is providing the desired boost to consumption.  They also pointed out that the rate structure of GST has changed now and the compensation cess is no longer part of the core tax structure.

“These have to be taken into consideration, and it is not possible to compare these numbers with those in the past,” they pointed out.

Underlining that the rate rationalisation under GST was a major reform, sources stressed that major gains will come from it going forward, as it has created an environment of a rational tax system.

Gross GST collections in November grew by 0.7% year-on-year (YoY) to Rs 1.7 lakh crore, while net revenue grew by 1.3% YoY to Rs 1.52 lakh crore. The data for November 2025 reflected the collections for October 2025, which was the first full month since the rate cuts as part of the Next Gen GST reforms came into effect.

As part of the GST reform, the government has rationalised rates with two main rates of 5% and 18% along with a 40% rate on sin goods such as tobacco and pan masala, while the 12% rate, as well as the compensation cess, have been done away with. A new Health Security se National Security Cess is set to be levied on cigarettes and tobacco products, for which the finance minister tabled Bills in the Lok Sabha on Monday.

Sources indicated that the compensation cess on cigarettes and tobacco products, which are currently being used to repay loans, is likely to come to an end later this year. “The repayments are on track,” they noted.

Based on the turnover data submitted by taxpayers for November, sources said that the reforms are showing that consumption has seen a boost but numbers going ahead will give a more comprehensive picture.

“The impact of these measures is clearly visible in data: taxable value of all supplies under GST grew by 15% during the two-month period of September–October 2025, compared to the same period in 2024. Growth in the same period last year was 8.6%,” explained an official source, adding that this surge in taxable value demonstrates strong consumption uplift, stimulated by reduced rates and improved compliance behaviour.

They further noted that the trends confirm that GST Next-Gen Reforms have not disrupted revenue stability, and that consumption-side buoyancy has begun to translate into higher taxable value in key sectors.

Growth has especially been strong in sectors where rate rationalisation was implemented, such as FMCG, pharma, food products, automobiles, medical devices, textiles, and the taxable value of supplies has seen significantly higher growth.

For instance, in prepared foodstuffs (excluding beverages, tobacco products and pan masala), the supply value increased by 17% in September and October 2025, as against 11% a year ago, while for buses and passenger cars, it grew to 20% in September and October 2025, compared to 12% growth a year ago.

Similarly, for construction-related items such as cement, glass, ceramic and stone products, the supply value increased by 19% in September and October 2025 versus a 2% growth a year ago.

Pharmaceuticals also saw a 13% growth in supply value in September and October 2025 compared to 5% growth a year ago. However, two sectors—textiles (apparel and fabrics) and two-wheelers and bicycles registered lower growth in supply value in September and October this year compared to last year. This was due to geopolitical developments and lower exports in the case of textiles and affordability of small cars in the case of two-wheelers and bicycles, sources said.

Experts also noted that November data points to a consumption boost.

“It is essential to note that the Gross GST collections ( excluding cess) have largely remained the same as the same month last year, indicating that the loss on account of rate reductions have been compensated by higher consumption, although not at the expected scale,” said MS Mani, Partner, Deloitte India, adding that while the GDP data indicates a robust growth, the GST collections over the next four months would indicate whether the FY26 fiscal targets can be met as planned.

“There is wide divergence in the state-wise collections, and a sectoral causative analysis is essential at this stage to enhance the collections with necessary policy measures. The GST registration data also indicates that a higher number of registrations is not directly correlated with higher revenues,” he further said.

Saurabh Agarwal, Tax Partner, EY India, also said that the recent softening in GST revenue collections was largely anticipated, reflecting the direct, albeit short-term, impact of the recent rate rationalisation measures. “Compounding this was the phenomenon of significant pre-stocking by businesses in the preceding month to meet the anticipated surge in festive demand post-rate rationalisation. This front-loading of purchases momentarily distorted the current month’s collection figures,” he further said.