US tariff impact shows up in GST collections in August, even as reforms are awaited

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The impact of US tariffs on the global economy showed in India's GST revenue in August, in the form of a 20% dip in export refunds.

GST collections rose 6.5% over the year earlier to ₹1.86 lakh in August due to higher domestic sales.(Mint)

GST collections rose 6.5% over the year earlier to ₹1.86 lakh in August due to higher domestic sales, according to government data released on Monday. That's lower that the ₹1.96 lakh crore collected in July this year.

While gross domestic revenue rose 9.6% to ₹1.37 lakh crore, GST earned from imports fell 1.2% to ₹49,354 crore. GST refunds were down 20% at ₹19,359 crore.

The significant dip in export refunds is a clear signal of the impact that global tariffs are having on our export sector," Saurabh Aggarwal, tax partner at EY, told HT Business over WhatsApp. “It is imperative we continue to proactively address these external challenges The government's efforts to deepen and diversify trade relationships with other economies will be key to ensuring our exporters remain globally competitive.”

“The decline in refund claims for inverted duty structures suggests that the government’s proactive measures to streamline the tax framework are yielding positive results.”

According to ICRA Chief Economist Aditi Nayar, while Central GST and State GST recorded double-digit expansion, the growth in Integrated GST and cess collection was tepid.

“The contraction in IGST on imports is puzzling in light of the sharp increase in merchandise imports in July 2025 (that would have reflected in the August 2025 GST data),” Nayar told the Press Trust of India.

GST Council meeting

The August GST collections were announced just two days before a crucial GST Council meeting to discuss rationalisation of the indirect tax. Finance Minister Nirmala Sitharaman, who heads the grouping, is highly anticipated to reduce the four-tier GST structure to just two.

According to Reuters, the government is planning to reduce GST by at least 10% percentage points on 175 items, including hybrid cars to ACs and TVs, as well as personal care products. Almost all goods and services are likely to attract 5% and 18% GST, barring a a few in a new 40% slab.

That should bode well for consumer demand during the upcoming festive season, according to Deloitte India Partner MS Mani.

“The increase in consumer demand (during the festive season) should result in significant jumps in collections in the coming months,” Mani told PTI. “However, reduced GST rates that are expected to be announced soon may temporarily moderate the collection.”

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