Consumption has improved across most product categories where GST rates were reduced as part of the government’s rate rationalisation exercise, but textiles and two-wheelers have not seen the expected recovery, data shared by the Ministry of Finance on Monday showed.
According to officials, cumulative consumption growth of the impacted goods rose to 15% in September–October 2025, compared with 8.6% in the same period last year. However, year-on-year consumption growth in textiles slowed to 8% from 12% a year earlier, while two-wheeler demand eased to 18% from 23%.
“The fall in textiles consumption is primarily due to a decline in exports. The slowdown in two-wheeler sales is because consumers are now opting for smaller cars, which have become more affordable after the rate cuts,” officials said.
While overall revenue has increased, gross domestic GST revenue — measured by taxable supplies — fell 2.3%, even as IGST collections from imports rose 10.2%. Officials expressed confidence that ongoing GST reforms will have a “bigger multiplier effect” in the coming months.
According to the officials in the finance ministry, the collection showed ‘resilient momentum’ even after compensation cess has been removed. The state GST collection has mostly gone down for the majority of the states barring a few exceptions like Haryana, Assam, Kerala, Maharashtra,where the revenue collection went up in November. Jharkhand has the highest fall in GST revenue as it went down by 30% as compared to previous year.
Officials maintained that states will emerge as the biggest beneficiaries of rate rationalisation in the long run, citing the revenue performance of states that have already seen gains post rate cuts.
Meanwhile, experts noted that while many everyday and consumer goods are now taxed at lower rates, the modest rise in GST collections indicates the benefits are still percolating through the economy and may take some time to translate into larger transaction volumes.
“As November falls within the initial phase of rate rationalisation, the muted growth underscores that while rate cuts offer structural relief, it may take a few more months before stronger momentum becomes visible in GST numbers,” said Sandeep Sehgal, Partner – Tax, AKM Global.
