GST 2.0 Reforms Trigger Strong Consumption Surge, Taxable Value Up 15% In Sept–Oct: Govt Official

GST 2.0 rate rationalisation is beginning to show visible impact, with November emerging as the first complete month of collections after the reform rollout, a government official said. According to the official, monthly numbers indicate that the reform trajectory is moving firmly in the right direction, even though the full effects of the rate cuts will unfold over the coming quarters.

Citing preliminary filings, the official suggested that taxable supplies grew 15% in September–October 2025, compared with 8.6% in the same period in 2024 — an almost double increase in growth momentum.

“We are beginning to see the impact of strong underlying demand, even as rates have been reduced under the rationalisation exercise,” the official said. “Supply growth has remained robust despite lower rates, which reflects confidence in economic activity and improved compliance.”

Notably, gross GST collections for November rose 0.7% year-on-year to Rs 1.7 lakh crore, while net collections climbed 1.3%, excluding the compensation cess, as per the data released on Monday.

The official added that the complete benefits of GST 2.0 will take time to materialise as businesses stabilise under the new rate structure. “The early trends give us confidence that consumption will strengthen as the transition settles,” the official noted.

A closer look at sectoral trends for September–October 2025 underscores the breadth of the consumption uplift. Ready-made food recorded growth of 17% compared to 11% in the same period last year, while passenger cars and buses expanded by 20% compared to 12% a year earlier. Medical devices grew 19%, up from 16% last year. Construction activity surged dramatically, rising 19% versus just 2% in the comparable period of 2024. Pharmaceutical products saw growth of 13% compared to 5% last year.

Goods carriers and other commercial vehicles grew 12% versus 2% in the previous year, and tractor sales rose 17% compared to 11%. Leather products showed robust momentum, expanding 18% against 9% last year.

Textiles, however, grew at a slower pace of 8% compared to 12% in 2024, with the sector affected by external headwinds. Two-wheelers and bicycles grew 18% versus 23% last year, a moderation driven by a high base and a consumer shift toward four-wheelers.

All other remaining categories together grew by 28% compared with 12% in the same period last year, pointing to broad-based expansion across the economy.

Officials say the data indicates that rate cuts have not undermined revenue stability. Instead, improved compliance, strong supply growth, and rising taxable value suggest that the GST 2.0 framework is beginning to support more sustainable and consumption-driven economic momentum.