GST collections have shown strong resilience in the face of repeated rate cuts, with revenues rebounding quickly after short-term declines.
The data shows that the GST-to-GDP ratio dipped to 6.1% in FY20 after rate reductions in October 2018 and July 2019 lowered the average effective GST rate to 11.6% from 14.4% when the tax was rolled out in 2017. The ratio fell further to 5.7% in FY21 during the pandemic.
However, collections recovered strongly thereafter, rising to 6.3% in FY22 and stabilising at 6.7% from FY23 through FY25, supported by buoyant growth and stricter compliance measures.
GST Collections vs GDP (Rs crore)
| Fiscal Year | GST Collections | GDP | GST-to-GDP Ratio |
|---|---|---|---|
| FY19 | 11,77,369 | 18,899,668 | 6.2% |
| FY20 | 12,22,118 | 20,103,593 | 6.1% |
| FY21 | 11,36,800 | 19,854,096 | 5.7% |
| FY22 | 14,88,227 | 23,597,399 | 6.3% |
| FY23 | 18,07,680 | 26,890,473 | 6.7% |
| FY24 | 20,18,249 | 30,122,956 | 6.7% |
| FY25 | 22,08,861 | 33,068,145 | 6.7% |
Economists Expect Similar Trend Under GST 2.0
Experts believe the newly announced GST 2.0 reforms will follow the same trajectory. According to SBI Research, rate cuts could cause an initial monthly dip of 3-4% in collections (about Rs 5,000 crore or Rs 60,000 crore annually), but inflows are likely to rebound with sustained growth of 5-6% per month.
On September 4, 2025, the GST Council approved a major rationalisation, collapsing the 12% and 28% slabs into a simplified two-rate structure of 5% and 18%. Over 90% of items have been shifted to the lower bracket, bringing the effective GST rate down to 9.5% from September 22.
The Centre has projected a Rs 48,000 crore revenue loss in FY25 against total collections of Rs 10.6 lakh crore, but analysts see medium-term gains.
Industry View
A Crisil report highlighted that differentiated taxes on lower- and higher-value goods-such as clothing and two-wheelers-could soften the fiscal impact. While essential and lower-priced goods see tax cuts, premium consumption by upper-income households may sustain revenues. Moreover, the shift from four to two slabs is expected to expand the tax base, enhancing compliance and supporting long-term tax buoyancy.
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