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Key Points

The GST rate rationalisation is expected to create a net revenue shortfall of Rs 10,664 crore in IGST receipts according to GTRI analysis. This calculation comes from studying customs data since imports contribute significantly to GST collections. The report shows tax cuts on certain goods will cause substantial revenue losses while hikes on others will generate gains. However, the overall impact remains negative despite these compensatory increases.

Key Points: GTRI Report Reveals GST Rate Changes Cause Rs 10664 Crore IGST Shortfall

  • GST rate changes affect imports worth USD 88.78 billion
  • Tax cuts on USD 55.2 billion goods cause Rs 49,324 crore revenue loss
  • Tax hikes on USD 33.5 billion goods bring Rs 38,660 crore gain
  • Imports contribute 24% of India's total GST collections annually
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GST rate rationalisation to cause Rs 10,664-crore shortfall in IGST receipts: GTRI Report

New GST rate rationalisation leads to Rs 10,664 crore revenue shortfall in IGST receipts from imports, according to GTRI analysis of customs data.

"the combined effect of cuts and hikes produces a net shortfall of about Rs 10,664 crore in IGST receipts - Global Trade Research Initiative"

New Delhi, September 5

The Central government is expected to face a revenue shortfall of Rs 10,664 crore in Integrated Goods and Services Tax (IGST) receipts due to the recent GST rate rationalisation, according to an analysis report by the Global Trade Research Initiative (GTRI).

The report provided a detailed picture of how the revised GST rates will impact government revenues through taxation on imports.

It stated "the combined effect of cuts and hikes produces a net shortfall of about Rs 10,664 crore in IGST receipts".

The report noted that a significant portion of GST revenue comes from imports.

In FY2024-25, IGST on imports alone contributed Rs 5,33,000 crore, which was about 24 per cent of India's total GST collections of Rs 22,08,861 crore.

Since imports are taxed directly at the border under IGST, the report stated that the customs data becomes the most effective tool to study the financial impact of tax changes.

India's merchandise imports in FY2024-25 were valued at USD 721.2 billion. Out of this, the latest GST revisions directly cover goods worth USD 88.78 billion, or about 12.3 per cent of the total import base.

This makes the analysis of import data crucial to understanding how the new tax structure will affect overall revenues.

Within the revised structure, goods worth USD 55.2 billion have seen tax cuts. This reduction will lower IGST collections from Rs 92,280 crore to Rs 42,956 crore, leading to a revenue loss of Rs 49,324 crore.

On the other hand, tax hikes have been applied to goods worth USD 33.5 billion. As a result, IGST inflows from these imports are expected to rise from Rs 21,923 crore to Rs 60,590 crore, generating a revenue gain of Rs 38,660 crore for the government.

When the losses and gains are combined, the net impact shows a shortfall of Rs 10,664 crore in IGST receipts.

The report highlighted that while these figures only represent the effect on imports, they provide the clearest available window into the wider economic implications of the GST Council's decisions.

The GTRI explained that the lack of publicly available product-level domestic GST data makes it difficult to study the complete picture of revenue impact within the domestic economy.

However, since imports account for nearly one-fourth of GST revenues, the changes in IGST collections are a powerful indicator of how the new rate structure will influence both government revenue and broader economic activity.

- ANI

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Reader Comments

P
Priya S
₹10,664 crore sounds like a huge amount, but in the context of total GST collections of over ₹22 lakh crore, it's actually less than 0.5%. The government must have considered this while making these changes. Hope it benefits common people.
A
Arjun K
The detailed breakdown is impressive! Good to see that while there are cuts on goods worth $55.2B, there are hikes on $33.5B worth of imports. This shows strategic thinking - reducing taxes on essential items while increasing on luxury imports maybe?
S
Sarah B
As someone working in import-export, I appreciate the transparency in this analysis. The customs data approach makes sense since import taxation is more straightforward to track than domestic transactions. Hope this leads to better policy decisions.
V
Vikram M
While I understand the need for GST rationalization, the government should ensure this shortfall doesn't lead to increased taxes elsewhere. Middle class is already burdened with high taxes. Hope this is managed properly.
M
Michael C
Interesting that nearly 25% of GST comes from imports! This shows how crucial international trade is for government revenues. The rate changes seem well-calibrated - net impact is relatively small compared to the scale of operations.
A
Ananya R
The government should

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