India’s Goods and Services Tax (GST) collections ended FY26 on a robust note, with March revenues crossing the ?2 lakh crore mark, signalling resilience in consumption, compliance and formalisation.
However, a deeper reading of the data reveals a more complex narrative, where a sharp surge in import-linked taxes and emerging global disruptions are beginning to shape the trajectory of collections.
Gross GST collections for March 2026 stood at ?2,00,064 crore, up 8.8% year-on-year and the highest in 10 months. Net collections, after refunds, came in at ?1,77,990 crore, reflecting an 8.2% increase.
For the full financial year 2025-26, gross GST collections rose to ?22.27 lakh crore, marking an 8.3% growth, while net collections stood at ?19.34 lakh crore, growing 7.1%. The numbers broadly track nominal GDP growth, reinforcing GST’s position as a key real-time indicator of economic activity.
The most defining feature of March’s GST data is the widening gap between domestic and import-driven revenues.
Gross domestic GST collections rose 5.9% year-on-year to ?1,46,602 crore. In contrast, GST collections from imports surged 17.8% to ?53,861 crore — more than three times the pace of domestic growth. Even at the annual level, domestic GST grew 6.4%, while import GST expanded 14.1%.
Manoj Mishra, Partner and Tax Controversy Management Leader at Grant Thornton Bharat, said this composition is particularly revealing. “The strength in GST suggests domestic demand and formal sector resilience are continuing to offset emerging pressures,” he noted, adding that rising global prices and external risks are beginning to show up in the data.
Rajat Mohan, Managing Partner at AMRG Global, offered a sharper geopolitical lens to the numbers. He pointed out that March 2026 marks the first full month of GST collections after the onset of the US–Iran conflict.
“The data suggests an early-stage inflationary boost to revenues rather than any immediate disruption,” Mohan said. He explained that escalating crude oil prices—driven by supply disruptions and strategic chokepoints such as the Strait of Hormuz—have significantly raised import costs, thereby pushing up GST collections on imports.
Additionally, precautionary stocking by businesses amid uncertainty may have contributed to higher transaction volumes during the month.
However, Mohan cautioned against reading too much into the headline growth. “These gains are driven by external shocks rather than underlying demand strength. If the geopolitical situation continues, it may have an impact on India’s GST collections in the long term,” he warned, even as he acknowledged that the data reflects a maturing GST framework with improving administrative efficiency.
Refunds rise, signalling stronger system efficiency
Refunds continued to rise, pointing to improved tax administration and faster processing timelines. Total refunds in March increased 13.8% year-on-year to ?22,074 crore, while full-year refunds grew 17.8% to ?2.92 lakh crore.
While higher refunds have moderated net revenue growth, they have also improved liquidity for businesses—particularly exporters—and strengthened confidence in the GST system.
Vivek Jalan, Partner at Tax Connect Advisory Services, said the trend reflects structural improvements. “GST collections provide a strong fiscal mirror to India’s GDP growth momentum. The rise in refunds signals improved efficiency and ease of doing business,” he noted.
State-level data shows broad-based but uneven trends
State-wise GST data underscores both the breadth of growth and the unevenness beneath the surface.
Among major states, Maharashtra continued to lead with a 17% rise in pre-settlement SGST collections in March, while Karnataka grew 14% and Gujarat posted a steady 5% increase. Telangana emerged as a standout performer with a sharp 19% jump, indicating strong regional momentum.
In northern India, Rajasthan saw a 9% increase, Uttar Pradesh grew 4%, and Bihar posted a 12% rise, while Haryana remained largely flat at 1%.
However, some states recorded declines. Tamil Nadu saw an 8% contraction in collections, while Chhattisgarh reported an 18% drop. Assam also posted a 15% decline, highlighting sector-specific or cyclical pressures.
Smaller states and Union Territories showed sharp increases, largely due to base effects. Sikkim recorded a 64% jump, Manipur 46%, and Mizoram 39%, while island territories also posted strong growth—indicating deeper formalisation and expanding economic participation.
Ikesh Nagpal, Lead – Indirect Tax at AKM Global, said the data reflects a broadening of the tax base. “The momentum is not limited to a few regions. Even smaller states show sharper but base-driven spikes, suggesting deeper economic activity,” he said.
A dual-speed narrative emerges
Experts increasingly point to a dual-speed narrative within the GST data—steady domestic demand on one hand, and rising external dependence on the other.
Saurabh Agarwal, Tax Partner at EY India, highlighted that the growing share of import GST, combined with softer export refunds, points to a widening trade imbalance. He suggested that policy recalibration—such as expanding or redesigning production-linked incentive (PLI) schemes—may be necessary to strengthen domestic manufacturing.
MS Mani, Partner at Deloitte India, also noted that a significant portion of GST growth has been driven by imports, which would have simultaneously boosted customs duty collections. He cautioned that March figures reflect economic activity from February and may not yet capture the full impact of ongoing geopolitical disruptions.
Compliance remains strong, but risks loom
Compliance continues to underpin GST growth, supported by digitisation and tighter enforcement.
Abhishek Jain, Partner and Head, Indirect Tax at KPMG in India, said GST collections have maintained a steady growth trajectory of around 9%, driven by strong import activity and consistent compliance. While export refunds eased in March, he noted they remain healthy overall.
However, the outlook is turning more cautious.
Rising crude prices, geopolitical tensions, and global inflationary pressures are expected to weigh on consumption and trade flows in the coming months. Ikesh Nagpal cautioned that the March data largely reflects pre-disruption conditions, and the real impact of global shocks will likely unfold going forward.
Strong finish, but sustainability in focus
The ?2 lakh crore GST milestone in March underscores the resilience of India’s economic fundamentals, with consumption, compliance, and administrative efficiency continuing to support revenue growth.
At the same time, the data highlights emerging vulnerabilities—particularly the growing dependence on import-driven revenues and uneven state-level performance.
Rajat Mohan summed up the broader picture succinctly: while GST as a framework is maturing and becoming more efficient, the quality of growth will be critical. If collections are increasingly driven by external shocks rather than underlying demand, sustaining momentum could become challenging.
For policymakers, the message is clear. GST remains a critical anchor for fiscal stability, but in an increasingly volatile global environment, maintaining the balance between domestic growth and external dependence will determine the durability of India’s tax buoyancy.
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