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GST collections rise 9 pc to over Rs 2 lakh cr in March, third highest in FY26

April 01, 2026 5 min read Economics GS3
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What Happened

  • Gross GST collections in March 2026 grew approximately 9% year-on-year to over ₹2 lakh crore — the third highest monthly collection in the FY2025–26 fiscal year.
  • Gross domestic revenues rose 5.9% to over ₹1.46 lakh crore, while revenues from imports grew 17.8% to ₹53,861 crore.
  • For the full FY2025–26 fiscal, total GST collections grew 8.3% year-on-year to over ₹22.27 lakh crore.
  • March 2026 surpassed the pre-tax-cut baseline of ₹2 lakh crore; this is significant because GST rates on approximately 375 items were reduced effective September 2025, causing a temporary dip in monthly collections.
  • After refund adjustments of ₹22,074 crore (up 13.8%), net GST revenues in March stood at about ₹1.78 lakh crore, up 8.2% year-on-year.
  • The highest-ever monthly GST collection remains April 2025 at over ₹2.36 lakh crore, followed by May 2025 at over ₹2.01 lakh crore.

Static Topic Bridges

GST Structure: CGST, SGST, IGST, and Compensation Cess

The Goods and Services Tax, implemented from July 1, 2017, under the One Hundred and First Constitutional Amendment Act, 2016, is a destination-based, dual VAT system. The dual structure means both the Centre and states levy GST simultaneously on the same transaction — Central GST (CGST) goes to the Union government, State GST (SGST) to the state government. For inter-state transactions, Integrated GST (IGST) is levied by the Centre and subsequently apportioned between the Centre and the destination state. A Compensation Cess is additionally levied on certain luxury and sin goods to compensate states for revenue lost due to GST implementation. The GST Council — a constitutional body under Article 279A — decides tax rates, exemptions, and structural changes.

  • Article 246A of the Constitution: gives Parliament and state legislatures concurrent power to legislate on GST.
  • Article 279A: establishes the GST Council, chaired by the Union Finance Minister with state finance ministers as members.
  • Original four rate slabs: 5%, 12%, 18%, 28%; reformed in September 2025 to two main slabs of 5% and 18%.
  • Compensation Cess: initially set for five years post-GST (till June 2022), extended to March 2026 to repay COVID borrowings; its continuation is now a subject of GST Council discussion.
  • IGST apportionment: Centre retains its share of CGST; IGST collected on imports is also part of Union receipts.

Connection to this news: The strong March collections — especially the 17.8% growth in import-side GST — reflect higher import values partly driven by the spike in crude oil prices following the West Asia conflict, illustrating how global commodity shocks translate into GST revenue impacts.

GST Rate Rationalisation and Revenue Implications

The September 2025 GST rate rationalisation consolidated four rate slabs into two (5% and 18%), with a narrow 40% slab for ultra-luxury goods and tobacco. The reform slashed rates on approximately 375 items. This predictably reduced monthly collections in the immediate aftermath — revenues fell to ₹1.70 lakh crore in November 2025 before recovering gradually. The March 2026 collection of over ₹2 lakh crore signals that the demand-stimulating effect of lower rates (more consumption volume) is compensating for the rate cut. GST rate rationalisation is a politically sensitive exercise because it redistributes the burden between goods and potentially changes the progressivity of the tax structure.

  • Pre-rationalisation (April–August 2025): average monthly GST collection was around ₹1.95–2.0 lakh crore.
  • Post-rationalisation trough: November 2025 at ₹1.70 lakh crore.
  • Recovery trajectory: ₹1.74 lakh crore (December) → ₹1.93 lakh crore (January) → ₹1.83 lakh crore (February) → ₹2.0+ lakh crore (March).
  • Inverted duty structure: GST Council also addressed cases where input tax rates were higher than output rates, causing refund claims to pile up.
  • GST refunds: exporters and those with inverted duty structures are entitled to refunds; March 2026 refunds of ₹22,074 crore (+13.8%).

Connection to this news: The return to ₹2 lakh crore-plus in March validates the government's thesis that broadening the tax base through lower rates can sustain or even increase total revenue, while also making goods cheaper for consumers.

Revenue Sharing Between Centre and States Under GST

The constitutional design of GST involves a complex revenue-sharing arrangement. CGST collections accrue entirely to the Centre; SGST collections go entirely to the state where consumption occurs. IGST is first collected centrally and then divided based on a formula between the Centre and destination states. This makes monthly GST data a critical indicator of fiscal health for both the Union and state governments. States with higher consumption (Maharashtra, Karnataka, Telangana) consistently record higher GST collections. States with large industrial production but lower final consumption (Haryana, Gujarat) may collect significant SGST but also have large exports (inter-state supplies subject to IGST), making cross-state comparison complex.

  • CGST revenue: 50% of GST on intra-state supplies goes to Centre.
  • SGST revenue: 50% goes to the state of consumption.
  • IGST split: roughly Centre retains 42% (based on Finance Commission formula); states share 58%.
  • Finance Commission: 15th Finance Commission (2021–26) recommended states' share of central taxes at 41% of divisible pool.
  • Top GST collecting states in March 2026: Maharashtra, Karnataka, Telangana (robust growth); Haryana, Andhra Pradesh, Madhya Pradesh (slower growth).

Connection to this news: March 2026's strong collection is important for state fiscal planning heading into the new financial year (FY2026–27), as it sets the baseline revenue expectation; states with high import dependency also benefit from the surge in import-side IGST collection.

Key Facts & Data

  • March 2026 gross GST: over ₹2 lakh crore (+9% YoY); third highest in FY2025–26.
  • Gross domestic revenues: over ₹1.46 lakh crore (+5.9% YoY).
  • Import-side GST revenues: ₹53,861 crore (+17.8% YoY).
  • Net GST (after refunds): ~₹1.78 lakh crore (+8.2% YoY).
  • Refunds issued: ₹22,074 crore (+13.8%).
  • Full-year FY2025–26 GST: over ₹22.27 lakh crore (+8.3% YoY).
  • Highest-ever monthly GST: April 2025 at over ₹2.36 lakh crore.
  • Rate rationalisation effective September 2025: ~375 items; four slabs merged to two (5% and 18%).
  • GST implemented from July 1, 2017; constitutional basis: 101st Constitutional Amendment Act, 2016.
  • GST Council: Article 279A; Union Finance Minister is chairperson.