GST Collections Hit ₹2.03 Lakh Crore in September 2026: Why the Rising Import Share Matters

Gross Goods and Services Tax (GST) revenue rose to ₹2.03 lakh crore in September 2026, a growth of 14.7 per cent over the previous year. Cumulatively, collections over April to September grew by 11.6 per cent. On the surface this is good news for the Union and State exchequers, and it came despite the rate rationalisation of September 2025 that lowered tax on many items. Net GST collections rose even faster, by 18.1 per cent, which analysts at Deloitte described as notable given last year’s higher rates.

Beneath the headline, however, lies a compositional shift. The share of GST collected on imports reached 32.2 per cent, its highest ever, while the domestic share fell to 67.8 per cent, its lowest. Import-linked GST grew 25.9 per cent against 10.1 per cent for domestic transactions. Understanding why this matters is essential for aspirants studying fiscal federalism, trade and macroeconomic management.

The question is whether strong GST numbers reflect healthy domestic demand or are partly an artefact of currency depreciation, commodity prices and import dynamics. Grant Thornton’s Manoj Mishra pointed to exactly this combination. With the manufacturing Purchasing Managers’ Index at a seven-month high of 55.1 in September, but the second-quarter average of 53.8 the lowest since 2021, the picture is mixed.

Background and Context

Five Important Key Points

• Gross GST collection in September 2026 was ₹2.03 lakh crore, up 14.7 per cent year-on-year.
• Import-linked revenue grew 25.9 per cent, while domestic GST grew 10.1 per cent.
• The import share rose to a record 32.2 per cent, and the domestic share fell to a record low of 67.8 per cent.
• Total refunds contracted by 3 per cent, driven by a fall in domestic refunds.
• Gross GST for April to September 2026 grew 11.6 per cent.

Legislative and Institutional Background

GST was introduced through the 101st Constitutional Amendment Act, 2016, which inserted Article 246A (concurrent power to tax goods and services), Article 269A (levy on inter-State supplies) and Article 279A (GST Council). The Council, chaired by the Union Finance Minister, decides rates and design by three-fourths weighted majority, with the Centre holding one-third of the votes. The September 2025 reform shifted the structure largely to two rates of 5 and 18 per cent, with a higher rate for sin and luxury goods. The compensation cess period for States ended, shifting attention to buoyancy of the base.

Reading the Data: Domestic versus Import GST

Import GST, mainly IGST on imports, depends on import values. When the rupee weakens and commodity prices, such as crude oil, rise, import values rise and so does tax collected at the border. The West Asia conflict, which pushed EU diesel prices to a record €2.24 per litre, is one such driver. Domestic GST, in contrast, reflects consumption and production inside India. Therefore faster import GST growth may signal pricing effects rather than demand. At the same time, higher input credit on imports is later claimed, which means the net benefit to the government is lower than the gross figure suggests.

Economic Implications

A rising import share has three implications. First, revenue becomes more exposed to external shocks and exchange rates. Second, it can mask a slowdown in domestic value addition. Third, it complicates the Centre-State sharing formula, because IGST on imports is apportioned between Centre and States, whereas State GST rests on domestic consumption. The data on refunds, down 3 per cent, indicates tighter administration and more audits. Deloitte’s M.S. Mani attributed growth partly to reduced complexity and more GST audits.

Governance and Compliance Issues

Anti-evasion measures such as e-invoicing, e-way bills, analytics and Aadhaar-based registration verification have improved compliance. Yet concerns persist: litigation over input tax credit, delays in setting up GST Appellate Tribunals, and compliance burden on small businesses. The Supreme Court in Union of India v. Mohit Minerals (2022) held that Council recommendations are persuasive rather than binding, which reinforces cooperative federalism but also invites disputes.

Federal Dimensions and Bihar

Bihar is a consumption State with a low manufacturing base, so its own GST revenue is small relative to population. It depends heavily on devolution from the divisible pool, where it has historically received one of the largest shares because of its low per capita income. Import-driven GST growth benefits States only to the extent that IGST is apportioned. Bihar’s gains depend on destination-based consumption growth in its markets, which is tied to rural incomes, remittances and agricultural conditions. A weaker monsoon, as seen this year, can restrain this. Bihar’s long-standing demand for special-category treatment, and for stronger Finance Commission transfers, gains force when GST buoyancy rests on imports rather than local activity.

Comparative Perspective

Global VAT systems also show import-heavy revenue when currencies fall. The United Kingdom and EU rely on import VAT collected at customs. India’s challenge is distinct: it has a federal structure with a shared base, so every compositional shift matters to State finances.

Way Forward

India should widen the base by bringing petroleum and electricity under GST in a phased and revenue-neutral manner. It should operationalise Appellate Tribunals fully and offer quicker dispute resolution. The Council could publish State-wise domestic and IGST data for transparency. Policymakers should reduce dependence on import values by promoting domestic manufacturing under schemes such as Production Linked Incentive and by stabilising the rupee through prudent external-sector management.

Relevance for UPSC and SSC Examinations

UPSC: GS-III (public finance, taxation, inclusive growth), GS-II (federalism, fiscal relations, Finance Commission).
SSC: GST structure, Article 246A, 279A, 101st Amendment, GST Council composition, IGST, CGST, SGST.
Key terms: IGST, input tax credit, GST Council, 101st Amendment, compensation cess, Mohit Minerals case, PMI, tax buoyancy.