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India's GST collections rose 6.2% to Rs 1.93 lakh crores in January, reflecting steady but modest growth as the economy entered 2026. Data released by the Ministry of Finance shows net GST revenue, after refunds, rising 7.6% to about Rs. 1.71 lakh crores, helped by lower refunds and stronger import-linked taxes.
On the surface, the numbers look reassuring. A closer look reveals an economy where growth is holding up but not evenly across all segments.
The biggest contributor to January’s GST growth came from imports. GST collected on imports rose more than 10% to over Rs. 52,000 crores, far outpacing domestic tax collections. This points to continued demand for imported goods, firmer customs valuations, and tighter compliance at ports.
Domestic GST collections grew at a slower rate of around 4.8%, suggesting a more cautious mood at home. While spending on essentials and services has remained stable, discretionary consumption, the kind driven by confidence rather than necessity, appears under pressure.
Tax officials state that Integrated GST (IGST), which includes import taxes, now forms a larger slice of overall GST revenue. Central GST and State GST showed steady but modest growth, broadly tracking domestic economic activity. Fewer refunds, down 3.1% to Rs. 22,665 crores, also helped lift net collections.
Put simply, imports are currently carrying more of the tax load than households and local businesses.
One number that stood out in January was the sharp drop in compensation cess collections to Rs. 5,768 crores, compared with Rs. 13,009 crores a year ago. The fall was not driven by weaker demand alone, but by a conscious policy shift.
Following cess rationalization in September 2025, the levy now applies mainly to tobacco and a limited set of products, instead of a wider basket of luxury and ‘sin’ goods. As a result, monthly cess inflows have shrunk sharply.
Officials stress that this decline does not pose a fiscal risk. The compensation mechanism for states has largely run its course, and cess revenues are no longer critical to state finances.
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January’s GST numbers suggest stability rather than acceleration. Revenues are growing, compliance is improving, but domestic demand remains cautious. As the Union Budget approaches, the challenge for policymakers will be clear: maintain a steady income and find ways to put more spending confidence back into Indian households.
