Economic Survey · Ministry of Finance, Department of Economic Affairs · 2026-01

Economic Survey 2025-26 - Chapter 2: Fiscal Developments (GST section and GST 2.0 box)

The fiscal chapter of the 2025-26 Survey has a section on GST revenue amid ongoing reform. It argues that GST collections hit several all-time highs in absolute terms in FY26 while growth broadly tracked nominal GDP, which low inflation held down. It uses e-way bill volumes as evidence that transactions stayed strong. A box sets out how the GST 2.0 reforms, effective 22 September 2025, are expected to work, and calls them the third leg of tax reform after the corporate tax cut of 2019 and the recent personal income tax changes.

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Key findings and recommendations

  • Gross GST revenue for April-December 2025 was Rs. 17.4 lakh crore, up 6.7 per cent year on year.
  • Cumulative e-way bill volumes for April-December 2025 grew 21 per cent, which suggests strong underlying activity.
  • The 56th Council moved to a two-rate structure, an 18 per cent standard rate and a 5 per cent merit rate, plus a special rate for a few goods.
  • Lower rates on cement, small cars, two-wheelers, medicines, toys, handicrafts and man-made fibres are expected to lift demand, MSMEs and exports.
  • The Survey expects collections to stay resilient as higher volumes and better compliance offset lower rates.

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