Central and state governments collected ₹1.78 trillion in net GST revenue this March after adjusting for tax refunds, an 8.2% annual increase and the highest monthly total since the record ₹2.09 trillion collected in April 2025, official data showed on Wednesday. This also marked the strongest performance for tax collections since the significant GST rate cuts implemented last September.

Before adjusting for refunds, revenue collection stood at ₹2 trillion, an 8.8% annual increase. This is the first time since May 2025 that gross GST receipts have touched ₹2 trillion, having come close in January 2026. Exporters receive GST refunds for the tax components included in their exported goods, while other businesses can claim refunds when tax structure anomalies result in higher taxes on raw materials than can be offset against their final tax liability.

Resilient growth

The uptick highlights the resilience of the economy and the effect of year-end inventory clearance. Policymakers have been of the view that the massive GST rate cuts implemented from 22 September would boost consumption demand and eventually tax collection as well.

India's economy is expected to grow at 7.6% in the current financial year, according to the second advance estimates released in February, although the war on Iran by US and Israel and the resultant global energy shock has increased downside risks.

Among other high-frequency indicators, the Federation of Automobile Dealers Association said February auto sales were record-breaking and reflected the "GST 2.0 tailwinds". In February, 2.4 million vehicles were sold in retail, marking 26% annual growth. Tax revenue collection in March reflects sales from February.

S&P Global said last month, citing the HSBC flash India PMI composite output index, a seasonally adjusted index that measures month-on-month change in the combined output of India's manufacturing and service sectors, that private sector output's growth in March was its weakest since October 2022, reflecting a softer upturn in domestic demand for goods and services despite surging export orders.

Vivek Jalan, partner at Tax Connect Advisory Services, said the GST collection figures reflected India's economic growth momentum. Refunds, which expanded nearly 18% during the year, moderated net revenue growth but also signalled increased efficiency in the tax system after GST 2.0's impetus on clearing 90% of refunds within seven days starting November 2025, he said.

"Overall, GST collections not only reinforce fiscal stability but also validate the broader macroeconomic narrative: India's tax system is keeping pace with GDP expansion, providing governments and businesses alike with confidence in the sustainability of growth," he added.