​Unwelcome surge: On the buoyancy in GST collections

India's June GST collections saw a significant 13.9% year-on-year rise to ₹1.95 lakh crore, primarily driven by a 34.6% surge in import IGST. This import-led buoyancy is attributed to increased imports of crude, petroleum products, and gold, exacerbated by a hike in gold import duty, rupee depreciation, and elevated global prices, suggesting imported inflation rather than robust domestic value addition. Domestic GST growth was a modest 6.5%. This trend is further supported by subdued performance of the eight core industries (2.8% growth in Q1 FY27) and moderating factory activity indicated by the HSBC Manufacturing PMI. While GST has expanded the tax base and strengthened indirect tax architecture over nine years, the recent numbers highlight underlying economic challenges.