Highs and lows: On GST metrics
That GST grossed ₹2.11 lakh crore in July , expanding by 15.4% year-on-year, the second best growth in FY27, could indicate that the Indian economy is resilient. But it conceals the uneven internal and external trajectories, and disparities within India. The 26.9% growth in import IGST vis-à-vis a 4.5% rise in domestic revenues ferrets out the criticality in the trade-led tax buoyancy. IGST’s faster pickup started during the post-pandemic recovery, reflective of global commodity inflation, higher imports of capital goods and the rupee’s depreciation. A 10%-12% depreciation of the Indian denomination over the past year had its reflection on the rupee cost of crude oil, electronics, machinery and chemicals — they collectively constitute as much as 50% of total imports — contributing to a higher import bill. Although gold imports added to higher IGST collections, supply fell to a six-year low, due to lower bullion imports, which fell 22%. High WPI inflation, notably at the manufacturing level, at 7.18% this June against 1.52% a year-ago period, explains the traction of domestic revenues in an ad valorem tax system amid five-year low manufacturing growth as seen from the HSBC Manufacturing PMI. The services witnessed slowest growth in 53 months with real estate and business services recording the strongest rise in charges, but the sector’s GST buoyancy is concentrated geographically. The fiscal reality is that only 16 States/UTs have reported post-settlement GST growth exceeding the national average and a little over a dozen States saw higher than average growth in GST, showing an increasingly chequered path as manufacturing and organised services are concentrated in a few jurisdictions; others, especially those with a larger unorganised sector, struggle to generate tax buoyancy, becoming dependent on central transfers and Finance Commission devolution. GST 3.0 should ensure that the benefits of economic expansion are geographically broad-based and fiscally inclusive. The faster domestic refunds, in comparison to IGST refunds, imply that formal businesses are expanding their GST compliance and also carrying larger credit balances as the government improved the GST ecosystem, even as faultlines such as input tax credit disputes and litigation are yet to be resolved. The July numbers warrant a closer reading as a healthy GST trajectory should reflect domestic production, growing incomes and broad-based consumption rather than exchange-rate-induced gains in import taxation and piggyback riding on local inflation. Otherwise ‘Make in India’ remains a tall claim as imported inputs do much of the heavy lifting in the GST metrics. Published - August 06, 2026 12:20 am IST Read Comments Copy link Email Facebook Twitter Telegram LinkedIn WhatsApp Reddit READ LATER SEE ALL Remove Related Topics taxes and duties / India / economy (general) / imports / trade policy / inflation and deflation / currency values / oil and gas - upstream activities / electronics / machine manufacturing / chemicals / Russia / gold and precious material / real estate / business (general)
- 1The Goods and Services Tax rests on a distinct federal architecture created by the 101st Constitutional Amendment Act of 2016, which inserted Article 246A giving Parliament and state legislatures concurrent power to legislate on GST. Article 279A established the GST Council, chaired by the Union Finance Minister with state finance ministers as members, to recommend rates and resolve disputes. The editorial's finding that only sixteen states exceeded the national average growth exposes the limits of this cooperative federalism when tax buoyancy concentrates unevenly across states.
- 2The editorial's finding that import IGST grew nearly six times faster than domestic revenue reflects India's continuing dependence on imported capital goods, electronics and chemicals, which together make up half of the import basket. This dependence sits uneasily with the government's Make in India and Production Linked Incentive programmes, launched in 2020 to build domestic manufacturing capacity across fourteen sectors. A ten to twelve percent rupee depreciation over the year further inflated the rupee value of these imports, artificially boosting tax collections without reflecting genuine domestic economic strength.
- 3GST administration is governed by the Central Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017, which together created the dual tax structure the editorial describes. Long-pending input tax credit disputes are now expected to move to the Goods and Services Tax Appellate Tribunal, which became operational in 2025 after years of litigation clogging High Courts. The Central Board of Indirect Taxes and Customs remains the nodal regulator overseeing compliance, refunds and anti-evasion enforcement referenced in the editorial's mention of faster domestic refunds.
- 4July's headline GST collection of two point one one lakh crore rupees masks a sharp divergence: import IGST rose 26.9 percent while domestic revenue grew only 4.5 percent. Wholesale Price Index inflation at the manufacturing level hit 7.18 percent in June 2026, up from 1.52 percent a year earlier, even as the HSBC Manufacturing PMI showed five-year-low growth and services recorded their slowest expansion in 53 months. Gold imports fell 22 percent to a six-year low, showing that some of the GST buoyancy came from price effects rather than expanding trade volumes.