Strong GST numbers mask weak domestic growth, import surge: Experts

New Delhi [India], May 1 (ANI): India's GST collections in April crossed the Rs 2 lakh crore mark once again, but experts say the growth was largely driven by import-linked revenues, even as domestic momentum remained modest.
Gross GST collections in April stood at Rs 2,42,702 crore, marking an 8.7 per cent year-on-year increase.
Reacting to the data, Saurabh Agarwal, Tax Partner at EY India, said, "The robust surge in GST collections underscores the fundamental resilience of the Indian consumption story."
However, he flagged a divergence within the data, noting that "while the headline numbers are encouraging, the divergence between modest domestic GST growth and the significant uptick in import-linked collections warrants a strategic pivot."
He added that in the current global environment, "we must critically re-examine our policy frameworks to further incentivize domestic manufacturing and ensure 'Make in India' keeps pace with global supply chain shifts."
On the policy side, Agarwal said, "The government's proactive approach to processing domestic refunds is a welcome signal of its commitment to liquidity," adding that this ensures "rate rationalization--and the resulting inverted duty structures--does not stifle industrial momentum."
He also pointed to broader economic expansion, saying "seeing double-digit growth in regions like Arunachal Pradesh, Kerala, Odisha, and Lakshadweep is particularly heartening; it reflects a more holistic and inclusive economic expansion."
Cautioning about the months ahead, Agarwal noted that "April's record figures reflect the year-end push for targets by both industry and administrators," adding that "we should anticipate a stabilization in the coming months, with collections likely seeing a sequential dip."
Echoing similar trends, Vivek Jalan, Partner at Tax Connect Advisory Services LLP, said, "India's GST collections in April 2026 once again crossed the Rs 2 lakh crore milestone, with net revenues rising 7.3% year-on-year to Rs 2.11 lakh crore."
He highlighted that "the surge was powered by a 42.9% jump in net customs GST collections, reflecting higher import costs amid global supply chain disruptions and war-driven commodity movements."
On domestic performance, Jalan said, "Gross domestic GST revenues stood at Rs 1.85 lakh crore, up 4.3% from April 2025, underscoring wider compliance coverage." However, he added that "net domestic collections remained flat as refunds--primarily under the inverted duty structure--spiked by 54%."
He further explained that "these refunds exclude the growing ITC accumulation on input services, which continues under GST 2.0's deepened inverted duty framework," adding that "this accumulation has maintained collections, it has simultaneously raised business expenses."
Jalan also noted that "additional support to domestic collections came from pre-deposits linked to Section 74 orders for FY 2019-20 issued before March 31, 2026."
The experts' views suggest that while GST collections remain strong on the surface, underlying trends point to a growing dependence on imports and structural factors, with domestic demand showing relatively moderate growth. (ANI)