In October, 20 out of the 36 states and Union Territories (UTs) in India experienced a decrease in their Goods and Services Tax (GST) collections. This trend represents the weakest monthly performance for the financial year 2025-26 (FY26), as businesses adjusted to the new GST 2.0 rate structure implementation.
In October, the State GST collections surged 2% and gross GST has surged to 4.6%, the lowest in FY26. The subdued collection has arrived post-robust momentum in the first half of the fiscal year, with growth peaking at above 13% in May.
Major states and UTs which discover their GST collections dropped into negative territory in October which includes Himachal Pradesh (-17 per cent), Jharkhand (-15 per cent), Uttarakhand (-13 per cent), Andhra Pradesh (-9 per cent), Madhya Pradesh (-5 per cent), Rajasthan (-3 per cent) and Delhi (-1 per cent) pointing to a broad-based slowdown across consumption and industrial centres.
Even large contributors like Haryana (0 per cent), Maharashtra (3 per cent), Tamil Nadu (4 per cent), and Gujarat (6 per cent) saw sluggish performance, lower than their earlier double-digit growth in April and May. However, Karnataka and Telangana, which had seen subdued numbers in September, posted 10% growth in October.
Officials and experts attributed the moderation to the timing of the GST 2.0 rate rationalisation, which came into force dated September 22. As monthly GST inflows show the activity from the earlier month, October fetches the duration when many businesses held back invoicing in early September to pass on lower rates to consumers. Prime Minister Narendra Modi has declared the GST 2.0 framework in his Independence Day address on August 15.
A senior state government official specifies that it was too hurried to conclude from data for a single month. “In September, only the last eight days reflected the new rates. Before that, many businesses held back sales in anticipation of the cuts,” the official cited
The official cited, “Even with that timing issue, September’s state GST collections were still quite decent. We should wait for the November numbers to see whether this moderation persists, though our expectation is that growth will improve as the festive demand flows through.”
A Tax Expert Cited That
In the first half of September, various sectors, particularly in automobiles and other high-value goods, saw a decrease in purchases in expectation of the rate reduction benefit to consumers w.e.f September 22. Consequently, just the last 8 days of September see the after-rate-reduction demand, which makes the October trend appear softer.
In the state-wise GST collections, the monthly variations need to be comprehended. It is important to examine the sector-specific GST collections. The same shall support sectoral policy making and support the states with their financial planning.
Sector-wise GST collection data has not been released till now by GSTN, which limits granular analysis of revenue trends.
Experts mentioned that the five major IT services hubs are Maharashtra (3 per cent), Karnataka (10 per cent), Tamil Nadu (4 per cent), Telangana (10 per cent), and Haryana (0 per cent), which together deliver nearly 80% of India’s IT services output have avoided contraction in GST collections, backed by stable service-sector revenues even as goods-led states saw stronger moderation.
Sluggish or negative GST growth in October has been seen by most of the states, with a few smaller regions bucking the trend. Arunachal Pradesh (44 per cent) and Nagaland (46 per cent) in the North-East, along with Ladakh (39 per cent), Andaman & Nicobar Islands (30 per cent), and Dadra & Nagar Haveli & Daman & Diu (10 per cent), show robust growth.
