GST boom: Will tax relief and festive buying push India’s collections higher?

Since the data pertains to transactions done in August, it signals reasonably robust demand, given that many big-ticket buys may have got deferred mid-month after Prime Minister Narendra Modi’s Independence Day announcement of an indirect tax-relief bonanza.

If GST rate cuts effective from 22 September result in surging retail offtake, incipient indications of which have arisen, the country’s mop-up could be higher in October and November.

The government would be tracking this data closely. Its tax stimulus is designed to stoke consumption, which accounts for about three-fifths of India’s economic output and was in need of policy support.

Moreover, the Centre’s fiscal math for 2025-26 would add up better if the revenue loss of rate cuts is offset by a boom in retail sales volumes. The trend in collections after this year’s festive season would show how durable the GST boost proves. Should it endure, economists who argue that high taxation is almost always a big restraint on growth would have good reason to feel acquitted.