The September 2025 GST restructuring has delivered encouraging results nine months after implementation. Net GST revenue, excluding cess, rose to ₹19.34 trillion in 2025-26 from ₹18.07 trillion, representing a growth of 7.1% in a year where reduced rates were operative for half the period. According to reports from Business Standard, gross revenues grew 8.3% during this period. Net collections in the current year stand at ₹5.40 trillion through June, registering 7.1% growth. The reform's impact extends beyond immediate revenue collection, with average monthly taxable supply reaching ₹51.7 trillion in the six months following rationalisation, up from ₹40.1 trillion in the same period a year earlier, representing nearly 29% growth.
The reform's benefits extend beyond revenue generation to broader economic activity. States' revenues grew 6% in FY 2025-26, demonstrating that the new arrangement has not disadvantaged state finances as suggested. As reported by Business Standard, the mechanism works through improved compliance as lower rates narrow the gap between taxed and untaxed goods. Passenger vehicle sales showed remarkable recovery, rising 15.8% in October, 18.1% in November, and 29% in December following the rate cuts, with February 2026 recording the highest sales ever for that month. The reform has also improved business processes, with refunds disbursed increasing from ₹2.49 trillion to ₹2.93 trillion, excluding cess, an increase of about 18% through faster automated clearance replacing manual scrutiny.
The rate rationalisation was designed to achieve multiple strategic objectives beyond revenue generation. According to the analysis in Business Standard, fewer slabs reduce classification disputes and lower compliance costs for smallest taxpayers. Most significantly, lower rates on mass-consumption goods provide direct transfers to households, supporting increased consumption. The reform was structured so that rate benefits would be passed to consumers, creating a virtuous cycle of consumption growth. The September 2025 restructuring included simplified registration processes and compressed timelines, along with reworked refund processing, making it easier for small businesses to comply with GST requirements.
The reform addresses longstanding criticisms of GST's complexity, with the system absorbing substantial rate cuts while continuing to expand revenue collection. As reported by Business Standard, the reform was delivered after years of criticism about multiple slabs and classification disputes. The compensation cess restructuring was designed to end the fiscally neutral arrangement that benefited neither the Centre nor states after 2022, with the Centre re-enacting tobacco excise duties as part of the divisible pool. The authors note that changes of this scale work through prices, behavior, and base expansion over multiple cycles, with the current evidence suggesting the reform is settling well despite the need for longer-term assessment to determine full returns.
