GST Collections Surge by 16.4% in May 2025: A Sign of Economic Resilience

In a significant reflection of India’s economic recovery and robust fiscal growth, the Goods and Services Tax (GST) collections for May 2025 surged to an impressive ₹2.01 lakh crore, marking a remarkable 16.4% rise from ₹1.72 lakh crore in the same month last year. This surge comes right on the heels of a record-breaking ₹2.37 lakh crore collection in April 2025, a result of strong domestic demand, improved tax compliance, and heightened economic activity.

The latest GST figures underscore the nation’s economic resilience and the effectiveness of the government’s tax administration policies, paving the way for a more sustainable fiscal future. Let’s break down the highlights of this robust performance and its implications for India’s economy.

GST Growth Drivers: Imports and Domestic Demand

The increase in GST collections is driven by two key factors: a strong surge in GST from imports and sustained domestic demand. Import-based GST revenue shot up by 25.2% to ₹51,266 crore, reflecting the growing demand for goods and services from abroad, which has fueled manufacturing and retail consumption. This increase also signals that international trade, a vital component of India’s growth story, remains strong and continues to contribute significantly to national revenue.

On the other hand, domestic GST revenue also saw a healthy rise of 13.7%, touching ₹1.49 lakh crore in May 2025, compared to ₹1.31 lakh crore last year. This indicates that the domestic economy is on a steady growth trajectory, with businesses and consumers contributing more to the tax pool as economic activities continue to strengthen across sectors.

Refunds and Net GST Revenue: A Balanced Picture

The government’s tax collection efforts are also reflected in the net GST revenue, which stands at ₹1.73 lakh crore for May 2025, after accounting for ₹27,210 crore in refunds. Notably, refund disbursements have decreased by 4% year-on-year, signaling improved efficiency in processing claims. After accounting for these refunds, the net GST collection for the month showed a 20.4% increase over the ₹1.44 lakh crore collected in May 2024, reinforcing the overall positive revenue growth.

Looking at the longer-term picture, India’s gross GST revenue for the 12-month period from June 2024 to May 2025 reached ₹4.37 lakh crore, marking an annual growth of 14.3% from ₹3.83 lakh crore in the previous year. In particular, Integrated GST (IGST) revenues accounted for ₹2.24 lakh crore, up 19.4%, demonstrating a solid contribution from both inter-state trade and imports. Additionally, Cess collections saw a notable rise of 26.3%, reaching ₹26,330 crore, indicating healthy tax collection from luxury and sin goods, which continue to remain in demand.

State-Wise GST Performance: Varied Growth Across India

GST collections across states show significant regional disparities, with some states posting impressive growth rates while others have experienced declines.

• Lakshadweep recorded the highest growth, a staggering 445%, jumping from ₹1 crore in May 2024 to ₹7 crore in May 2025. This is a reminder that smaller regions are also catching up with the overall tax ecosystem, even as they start expanding their economic base.

• Delhi, one of the major economic hubs, saw a 38% increase in collections, totaling ₹10,366 crore, driven by strong consumption and business activity. This marks a major boost for the capital’s economy, which continues to play a critical role in India’s financial ecosystem.

• Maharashtra, traditionally the highest contributor to GST collections, saw a steady rise of 17%, with collections amounting to ₹31,530 crore.

• Other states like Karnataka (20% growth to ₹14,299 crore), Tamil Nadu (25% rise to ₹12,230 crore), and Kerala (24% growth) showed strong performances, further reinforcing the spread of economic growth across the country.

However, not all states saw growth. Mizoram faced a notable decline of 26%, while Uttarakhand (-13%) and Andhra Pradesh (-2%) experienced reduced collections. Uttar Pradesh, despite its economic size, saw its collections remain flat at ₹9,130 crore, showing that even larger states face challenges in optimizing tax revenues.

Looking Ahead: Optimism for FY26

The continued surge in GST collections presents a promising outlook for the fiscal year ahead. The government has projected an 11% increase in GST collections for FY26, with a target of ₹11.78 lakh crore. This growth forecast reflects optimism about the economy’s trajectory, as the government focuses on improving tax compliance, enforcing tax laws more effectively, and expanding the tax base to include more businesses and services across India.

With sustained efforts towards broadening tax coverage in underperforming regions, the government hopes to bridge regional gaps and further boost overall revenue growth. The rising GST collections also signal strengthening economic conditions, with industries showing greater confidence in their business prospects.

An Indicator of Economic Resilience

May 2025’s strong GST collections reflect much more than just numbers; they highlight India’s ongoing economic recovery, the efficiency of its tax policies, and the nation’s potential to maintain sustained growth. From robust import-driven tax receipts to steady domestic demand, this surge is a testament to India’s resilience, even as global and domestic challenges continue to evolve.

As the government eyes even higher targets for the coming fiscal year, this growth could serve as a stepping stone towards a more stable and prosperous economy, with a broadening tax base that ensures equitable growth for every region of India.