India’s GST Revenue Growth Slows to 4-Year Low in June 2025

India’s Goods and Services Tax (GST) revenue for June 2025 offers a mixed picture of the economy’s health. While the gross collection grew 6.2% year-on-year to reach ₹1.85 lakh crore, the pace of growth was the slowest in four years, signalling subdued consumer demand and broader economic caution.

This figure is 8.2% lower than May 2025’s collection, indicating a four-month low in monthly revenue. Experts suggest this deceleration reflects the combined impact of geopolitical uncertainties, consumer sentiment pressures, and a softening demand environment across many sectors.

Understanding GST Collections: Headline vs Net Figures

India’s gross GST collections stood at ₹1.85 lakh crore in June 2025. However, once refunds were processed, the net GST collection for the month was ₹1.59 lakh crore, which is 3.3% higher than the comparable figure in June 2024.

This net growth figure provides a clearer picture of the actual government revenue available for spending on public services and infrastructure.

Quarterly Trends Highlight Slowing Momentum

When examining quarterly data, GST collections for April-June 2025 (Q1 of FY26) stood at ₹2.07 lakh crore, offering a broad but cautious look at the economy.

Pratik Jain, Partner at Price Waterhouse & Co LLP, noted:

“Around 6% growth in GST collections, coupled with less than 4% growth in advance tax collection for the first quarter of FY26, does indicate softening of demand and a cautious outlook.”

This perspective reflects growing concerns among economists that consumption, a major driver of the Indian economy, may be moderating after a strong post-pandemic recovery.

Regional Highlights: Pockets of Strong Growth

Despite the overall slowdown in national GST growth, certain regions showed impressive performance.

Saurabh Agarwal, Tax Partner at EY India, remarked:

“It is a positive sign that the data shows strong pockets of growth in GST collections in regions such as Nagaland, Sikkim, Tripura, Lakshadweep, and Ladakh.”

These regions, traditionally smaller contributors to the GST pool, are experiencing faster formalisation of their economies, better compliance, and improved consumption patterns.

Economic Context: Factors Influencing GST Collections

Several macroeconomic factors have contributed to the slowdown in GST revenue growth:

• Geopolitical uncertainties, including global tensions and trade disruptions, have impacted supply chains and consumer confidence.

• Monetary policy tightening over the last year has led to higher borrowing costs, moderating household spending.

• Rural demand has remained uneven, influenced by factors such as weather variability and inflation in essential goods.

• Global economic slowdown has reduced demand for India’s export-linked sectors, indirectly affecting domestic GST collections.

These trends indicate that while India’s economy remains resilient, headwinds are clearly visible, especially in consumption-led sectors.

Comparing June 2025 to Previous Years

It is notable that June 2025’s 6.2% growth is the lowest rate recorded since June 2021, a time when the country was emerging from COVID-19’s second wave.

In comparison:

• June 2022 had registered robust double-digit growth, fuelled by post-pandemic recovery.

• June 2023 and 2024 maintained steady growth, reflecting consumer resilience and government initiatives to improve tax compliance.

The 2025 slowdown therefore stands out as a warning sign that the economy may be entering a more moderate growth phase, requiring policy attention.

Refund Adjustments: Clarifying the Numbers

GST revenue is often reported in gross terms, but it’s crucial to consider refund adjustments, which reflect the net revenue available for government spending.

In June 2025:

• Gross GST: ₹1.85 lakh crore (up 6.2% YoY)

• Net GST (after refunds): ₹1.59 lakh crore (up 3.3% YoY)

Refunds are typically processed for exports, input tax credits, and other eligible categories. A larger refund outflow can sometimes indicate healthy trade activity, but it also tempers the net cash flow into government coffers.

Expert Analysis: Beyond the Headline Numbers

EY India’s Saurabh Agarwal stressed the need to look beyond headline numbers:

“The domestic GST collections for June 2025 present a nuanced picture. While the overall growth appears muted, likely influenced by prevailing geopolitical uncertainties and their discernible impact on consumer sentiment, we must look beyond the headline numbers.”

This suggests that policymakers and businesses need to understand regional variations and sector-specific dynamics rather than assuming uniform weakness across the economy.

Positive Takeaways Despite Slow Growth

While the national growth rate slowed, there are notable positives:

• Consistent overall revenue near ₹1.85 lakh crore indicates broad tax base stability.

• Regional surges in the North-East and Union Territories suggest inclusive growth and improved compliance in previously under-reported areas.

• Structural reforms, like e-invoicing and GSTN improvements, continue to support tax administration efficiency.

The Role of Consumer Demand

Consumer demand is a critical driver of GST collections, as the tax is levied at every stage of the value chain, from production to final consumption.

A softening in demand affects sectors such as:

• Automobiles

• Consumer electronics

• Retail trade

• Travel and hospitality

This ripple effect is reflected in slower GST growth, suggesting that household spending patterns may be adjusting in response to economic uncertainty.

Government Outlook and Policy Considerations

The government remains optimistic about medium-term GST growth, backed by:

• Steady formalisation of the economy.

• Digitisation initiatives that curb tax evasion.

• Broadening of the GST base through compliance and technology.

However, June 2025’s data also serves as a signal to policymakers about the need for:

• Targeted fiscal support to boost demand in rural and low-income segments.

• Monitoring of global developments that impact trade and supply chains.

• Incentives for sectors struggling with high input costs or slow demand.

Industry Perspectives on June’s Data

Tax professionals and industry analysts have weighed in on the numbers:

✅ Pratik Jain (Price Waterhouse & Co LLP):

“Around 6% growth in GST collections, coupled with less than 4% growth in advance tax collection for the first quarter of FY26, indicates softening of demand and cautious outlook.”

✅ Saurabh Agarwal (EY India):

“We see strong pockets of growth in regions such as Nagaland, Sikkim, Tripura, Lakshadweep, and Ladakh, showing encouraging signs of formalisation and inclusion.”

These perspectives highlight that while headline growth has slowed, opportunities remain for targeted development and policy support.

Final Thoughts: Reading June 2025’s GST Data in Context

India’s June 2025 GST revenue reflects a complex reality:

• 6.2% YoY growth, the slowest in four years, signals cautious consumer behaviour and geopolitical headwinds.

• Regional bright spots underscore diversification and improved compliance.

• Net collections remain solid despite higher refunds, showing robust structural health.

Going forward, balancing demand revival with fiscal prudence will be key. Policymakers must support vulnerable sectors, encourage investment, and maintain momentum on tax reforms to ensure that India’s GST growth returns to a strong, sustainable path.

The Upcoming IPOs in this week and coming weeks are Smarten Power Systems, Glen Industries, Travel Food Services, Anthem Biosciences, Chemkart India, Meta Infotech, Happy Square Outsourcing Services, Cryogenic OGS.

The Current active IPO are Crizac, Silky Overseas, Vandan Foods, Pushpa Jewellers, Cedaar Textile, Marc Loire Fashions.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.