GST Mop-Up Steady But Rate Rejig, Online Gaming Curbs May Hit Revenue: Experts

India's goods and services tax (GST) collections have remained broadly stable over the past few months. In August 2025, gross collections rose 6.5% year-on-year to Rs 1.86 lakh crore, up from Rs 1.75 lakh crore in the same month last year, according to provisional figures released by the Finance Ministry on Monday.

While the overall trend reflects economic resilience, experts caution that anticipated rate rationalisation and the stalling of certain revenue streams, such as online real-money gaming, may lead to a near-term dip in collections.

Abhishek Jain, indirect tax head and partner at KPMG, said early signs of softening are already visible. “Broadly, collections have been aligned with the past couple of months, though refund disbursals have seen some reduction. What will be interesting to watch is the impact on collections in the coming months, particularly with the anticipated rate rejig and certain revenue streams stalling, such as those from online real-money gaming,” he said.

The increase in August was largely driven by strong domestic GST collections, which rose 9.6% to Rs 1.37 lakh crore, indicating resilient consumption and improved compliance. 

However, GST revenue from imports declined 1.2%, totaling Rs 49,354 crore, pointing to a possible moderation in trade activity. Meanwhile, total refund disbursals fell sharply by 19.9% to Rs19,359 crore. As a result, net GST revenue (after adjusting for refunds) stood at Rs 1.67 lakh crore, registering a 10.7% rise over August 2024.

For the April–August 2025 period, gross GST collections reached Rs 10.04 lakh crore, reflecting a 9.9% year-on-year increase. Net GST revenue during the same period rose 8.8% to Rs 8.78 lakh crore, compared to Rs 8.07 lakh crore in the year-ago period.

MS Mani, partner at Deloitte India, noted that state-wise performance offered deeper insights into economic trends. With large manufacturing states such as Maharashtra, Karnataka, Uttar Pradesh, Haryana, Tamil Nadu and Andhra Pradesh posting annual growth rates between 9% and 21%, overall GST collections (net of refunds) have risen by 13.5% compared with August last year. 

He added that the increase in collections is consistent with the GDP growth data released recently and is likely to give policymakers the confidence to advance GST 2.0 reforms, which are expected to be discussed in the upcoming GST Council meeting.

Despite the overall uptick, Mani highlighted a reversal in the recent trend of rising refunds. “After four months of increases in GST refunds, this month depicts a decline. Although on an annual basis, refunds are still 18% higher than last year,” he noted.

He also pointed out the seasonal nature of collections, adding that the figures for August pertain to economic activity in July, a month typically impacted by Monsoon-led lower demand for goods and services. With the onset of the festive season from August through November, demand is expected to pick up significantly, likely boosting collections in the coming months. However, he cautioned that the anticipated GST rate cuts, if announced soon, may temporarily moderate this momentum.

Saurabh Agarwal, tax partner at EY, echoed similar concerns, stating that while India's GST performance continues to reflect underlying economic strength, external pressures and policy uncertainties could weigh on future trends. “Timely implementation of the proposed GST rate rejig will be key to sustaining current revenue trends. Any delay could lead to a ‘wait-and-watch' approach from consumers, potentially dampening collections in the coming months. Decisive policy action at this stage is crucial,” Agarwal said.

Despite global headwinds, India's growth trajectory remains on solid footing, underpinned by domestic consumption. However, the sharp dip in export refunds points to ongoing challenges in outbound trade, possibly stemming from tariffs and trade barriers. Government efforts to deepen ties with other developing economies may help shield Indian exporters from some of these pressures, Agarwal noted.

As the GST Council prepares for a key meeting later this week, striking a balance between simplification, compliance, and revenue stability will be essential to maintaining fiscal momentum.