India’s tax revenues continue to showcase resilience, as the gross Goods and Services Tax (GST) collections for May 2025 rose to ₹2.01 lakh crore, marking a significant 16.4% year-on-year increase from ₹1.72 lakh crore in May 2024. This robust uptick follows the historic ₹2.37 lakh crore collected in April 2025, indicating sustained tax buoyancy despite ongoing global economic uncertainties.
According to the Ministry of Finance, this is the second consecutive month with GST collections crossing the ₹2 lakh crore mark—highlighting strengthening economic activity and improved compliance across the board.
Detailed GST Revenue Break-Up – May 2025
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Central GST (CGST): ₹35,434 crore
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State GST (SGST): ₹43,902 crore
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Integrated GST (IGST): ₹1.09 lakh crore
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Includes ₹39,879 crore collected on import of goods
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GST Compensation Cess: ₹12,879 crore
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Total GST Refunds: ₹27,210 crore (decline of 4% YoY)
Imports Drive the Growth in Collections
The revenue spike was mainly driven by a 25.2% increase in GST collected from imports, while GST from domestic transactions saw a healthy growth of 13.7%, signaling a broad-based expansion.
Vivek Jalan, Partner at Tax Connect Advisory Services LLP, emphasized this trend:
“It is very clear that this month’s growth in GST revenue is import-driven rather than domestic consumption-led. Even year-to-date trends reflect this imbalance, and the lack of a corresponding increase in export refunds further confirms the dominance of import growth.”
This trend suggests that global supply chain shifts, along with sustained demand for imported goods, are playing a larger role in India’s tax landscape this fiscal year.
Expert Views: What the Numbers Really Indicate
According to Saurabh Agarwal, Tax Partner at EY:
“Last month’s higher GST numbers were partly influenced by year-end B2B sales to meet targets. However, the current month’s figures suggest some caution in consumer demand, likely influenced by inflation moderation and international uncertainty.”
Yet, Agarwal remains optimistic, pointing out that continued upticks in GST collections across states and union territories—including Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Tripura, Meghalaya, Assam, Lakshadweep, and Andaman & Nicobar Islands—signal wider economic development and increased formalization of the economy.
GST Growth as a Policy Enabler
Notably, Pratik Jain, Partner at Price Waterhouse & Co LLP, sees this revenue consistency as a strong macroeconomic signal:
“If this momentum in GST revenue sustains over the next few months, it may give the government enough cushion to finally initiate long-pending GST rate rationalization, which has already been extensively studied and planned.”
Rate rationalization could help simplify India’s complex tax structure, reduce classification disputes, and improve overall tax compliance, boosting India’s image as a business-friendly destination.
Geopolitical Context and Consumption Patterns
Interestingly, this surge in GST revenue comes amid ongoing global geopolitical tensions, including trade policy uncertainties and supply disruptions. While these factors typically depress trade and investment flows, India appears to be holding its ground through resilient imports, infrastructure push, and formalization of small businesses.
At the same time, a slight drop in GST refunds (down 4% YoY) indicates a shift in input-output balances. Analysts caution that if the trend of higher imports without matching export growth continues, India must stay vigilant about its current account and ensure policy support for domestic industries.
Outlook: Can GST Stay Above ₹2 Lakh Crore?
Looking ahead, experts project similar revenue figures in June 2025, with minor fluctuations expected due to international price volatility and festive consumption patterns. As monsoon forecasts remain positive and inflation stays within the RBI’s comfort zone, domestic demand could regain strength by the second quarter of FY26.
Moreover, the consistent high GST collections are seen as a positive sign for India’s fiscal health, providing room for higher capital expenditure without breaching fiscal deficit targets.
Source: Economic Times