August GST Performance
The latest revenue numbers indicate continued resilience in tax collections, though experts noted that refund disbursals had slowed. According to Abhishek Jain, Indirect Tax Head & Partner at KPMG India, collections remain broadly in line with recent months, but upcoming rate changes and revenue pressures from sectors like online gaming may impact future performance.
For the full fiscal year 2024-25, India recorded gross GST collections of ₹22.08 lakh crore, the highest since GST was introduced in 2017. This marked a 9.4% increase compared to FY24. Average monthly collections during FY25 rose to ₹1.84 lakh crore, higher than ₹1.68 lakh crore in FY24 and ₹1.51 lakh crore in FY22, highlighting a steady upward trajectory.
Taxpayer registration has also expanded significantly. From just 65 lakh registered taxpayers at the time of GST’s launch, the number has grown to over 1.51 crore by mid-2025, broadening the tax base and enhancing compliance.
GST 2.0: Major Reform on the Horizon
The Modi government has announced its intention to roll out GST 2.0, a major restructuring of the current tax framework. Prime Minister Narendra Modi, in his Independence Day address, termed the reforms a “Diwali gift” to the nation. The new system proposes two main tax slabs — 5% for essential goods and services, and 18% for others — while eliminating the 12% and 28% categories.
Essential items such as food, medicines, and educational materials will either be exempted or taxed at 5%. Middle-class consumer goods like air conditioners, televisions, and refrigerators are expected to be taxed at 18%. However, the treatment of automobiles and cement, currently taxed at 28%, is still under review.
Relief for Households and Insurance Sector
The proposed reforms also include reductions in GST rates on health and term insurance policies, a long-standing demand from both the insurance industry and middle-class households. The government is also considering ending the compensation cess before March 2026 and imposing a 40% rate on harmful products like tobacco and certain luxury goods.
Looking Ahead
Economists suggest that while GST collections remain strong, the true test will be sustaining momentum as the government transitions to the simplified GST 2.0 regime. The reforms aim to reduce compliance burdens, increase transparency, and improve ease of doing business, while ensuring adequate revenue for both the Centre and states.
As India enters a crucial phase of tax restructuring, businesses and consumers alike await clarity on how GST 2.0 will reshape the country’s economic landscape.