Blasé Capital GST CUES

As expected, after the previous month’s intensity, gross GST collections are down to their lowest level in the past 12 months. The figures for November 2025, which reflect the collections for October, were down to Rs1,70,000 crore, the lowest since November 2024. The former are up by less than a percentage point on a year-on-year basis. Compared to the October 2025 figures, which indicate the numbers for September, the figures in November this year are down by a massive Rs 26,000 crore. Remember the dual impact due to cuts in tax rates, and lesser slabs, and the festive season, which included buying during Dussehra and Diwali. In late September, when the cuts were implemented, firms talked about huge demand. This may have petered off a bit in October, coupled with lower tax rates. Hence, there are three issues to contend with.

First, as past figures show, GST collections are normally the lowest in the months of either November or December which, as stated above, reflect the collections for the previous months. This was true in November 2024, when the numbers dipped below Rs1,70,000 crore, and December 2023, when it was below Rs1,65,000 crore. However, the lowest numbers in 2023 were in August, when the figure fell below Rs1,60,000 crore, and February, when the numbers dipped to below Rs1,50,000 crore. There is invariably an uptake after November-December, and the figures zoom in March and April, which indicate the collections in February and March, the last two months of the fiscal year. Hence, the test of what the GST cuts imply will come in these last two months. Since 2022, discounting the pandemic years of 2020 and 2021, the huge peaks in GST were in April. In April 2025, the collections were almost Rs2,37,000 crore.

Second, the hurtle this November may seem quite steep on a month-on-month basis compared to the falls in the previous years. But in November 2024, the dip was almost a percentage point, or higher. In the months of November and December 2024, the month-on-month decreases were much less than now. In terms of actual collections, the drop of Rs26,000 crore in a single month is significant. Such a steep fall has rarely been witnessed since the Covid years. Compare this to the official estimates made after the GST cuts, which indicated that on a yearly basis, the GST collections will be down by less than Rs50,000 crore. If the finance ministry’s version is correct, and higher volumes will make up for the difference in 2026-27, we still have another four months to go. If the trend continues, the actual loss to the Exchequer may be steeper than estimated.

Third, the good news about the Indian economy seems to lag the bad news. In the recent past, the quarterly numbers for GDP growth were higher-than-anticipated. A growth of eight per cent in the first half of this fiscal on top of trade disruptions, and high US tariffs, is remarkable. Juxtapose this with the GST collections figures in November, and the PMI index, which dipped. While the GDP numbers hint that manufacturing is on a high, the latter two indicate that there is trouble brewing in the secondary sector. The upbeat growth in the first half may be due to frontloading on the domestic and external fronts. Scared that the US may impose high tariffs on India, exporters boosted shipments, even as the American buyers were willing to build inventories at lower duties. Knowing that the GST cuts were on for more than a month, after Prime Minister Narendra Modi practically announced them on August 15, there was a build-up of domestic inventory to cater to the coming demand.

In such a situation, one needs to wait and watch. There is more good news in the offing. India and the US will surely sign a bilateral trade deal, but the timing will be crucial. If it happens in December 2025, manufacturing will take off, and so will a few segments in services. If it is delayed to February, industry will hurt and bleed, which will reflect in corporate earnings. The real impact of the tariffs will come from November onwards. There is therefore an urgency to finalise the deal, sooner than later. On the flip side, an agreement between the two nations will hurt new industries due to cheaper American exports. Hence, some sectors will need to brace for the negative impact. Both will imply a churn in business strategies, and the fortunes of Indian companies. This will affect stock prices. Consumers may benefit due to cheap imports, and further downward pressures on domestic prices, which may boost demand. This may help the manufacturers, and boost official revenues.

As one can see there are several ifs and buts. These factors will play out in the future, and quite unevenly. Over the next few months, even weeks, developments will guide the growth journey, and decide if the ongoing momentum is sustained, or the bad news lingers on. One cannot take anything for granted. This will be a period of higher uncertainty, and filled with doubts, compared to the past few months, when most firms, and policy-makers grappled with trade and tariff issues. The country is still perched on shifting sands.