The main driver of the growth was GST collected on imports, which surged 28.8% to ₹66,511 crore. “The July GST collections are a compelling vote of confidence in India’s economic resilience,” said Manoj Mishra, partner and tax controversy management leader at Grant Thornton Bharat.
Mishra attributed the sharp rise in import GST to a combination of higher merchandise imports, depreciation of the rupee that inflated the taxable value of imported goods and elevated global energy and freight costs amid continuing tensions in West Asia.
But this is not solely an import-price story, he said. Domestic GST collections grew a robust 10.1%, reflecting resilient household consumption, formalisation and industrial activity. “The steady growth in GST collections each month on domestic consumption indicates that overall domestic consumption is becoming largely insulated from seasonal variations and external headwinds,” said MS Mani, partner-tax at Deloitte India.
GST mopup from key manufacturing states including Maharashtra, Gujarat, Karnataka and Telangana rose. Despite elevated refunds, net GST collections climbed 15.8% to ₹1.81 lakh crore.
Experts said the elevated levels of GST collections on imports were a concern. “Much of the growth this month was driven by imports, though it’s worth digging into whether that’s finished goods or raw materials, and how much of it simply reflects a weaker rupee rather than higher volumes,” said Abhishek Jain, indirect tax head and partner, KPMG.
Inverted Duty Structure
This may be time to start thinking about a GST 3.0, specifically easing refunds on input services and correcting the inverted duty structure, he added.
“This points to a persistent gap in domestic manufacturing capability despite the range of successful PLI (production-linked incentive) and Atmanirbhar Bharat interventions rolled out over the past few years,” said Saurabh Agarwal, tax partner, EY India.
A sustained push by policymakers towards localisation will be critical for India to convert consumption-led growth into a more durable, manufacturing-anchored expansion, he said.