New Delhi — Government‑wide indirect tax collections rose 14 percent year‑on‑year to ₹195 lakh crore in June 2026, the first full‑month after the Goods and Services Tax (GST) turned nine on July 1, according to the Ministry of Finance. While the increase underscores the tax’s expanding base, data show a widening share of revenue from imports and a slowdown in domestic sales, prompting tax experts to flag lingering structural flaws.
Revenue growth and import tilt
The Ministry’s GST‑MOP‑Up report released on July 2 shows total collections of ₹195 lakh crore in June, up from ₹171 lakh crore in June 2025. The rise is driven largely by higher customs duties on imported goods, which accounted for roughly 28 percent of total GST receipts – a rise of 4 percentage points from the previous year. In contrast, sales of domestically manufactured products contributed a smaller share, with the report noting a “lag in domestic sales” that has kept the domestic component of GST revenue relatively flat.
Key concerns highlighted by tax specialists
Industry analysts say the data reveal three persistent challenges:
* Input tax credit bottlenecks – Many businesses still struggle to claim credits for taxes paid on inputs, especially when dealing with multiple state registrations. Delays in credit utilisation reduce cash flow for manufacturers and service providers.
* Dispute‑resolution delays – The number of pending GST disputes rose by 12 percent over the past year, according to the GST Council’s grievance‑redressal statistics. Experts argue that protracted litigation undermines confidence in the system.
* Inverted duty structure – Because the GST rate on finished goods often exceeds that on raw materials, manufacturers face higher compliance costs. The mismatch encourages some firms to import finished items rather than source locally, further feeding the import‑driven revenue surge.
“Nine years on, GST has clearly broadened the tax net, but the system’s design still penalises domestic producers,” said Ramesh Gupta, a senior partner at tax consultancy KPMG India, speaking on condition of anonymity. “Unless the input‑credit chain is streamlined and the duty structure rationalised, we risk a scenario where the tax increasingly funds import consumption rather than supporting home‑grown industry.”
Government response
In a statement, Finance Minister Jitendra Singh said the government is “committed to addressing the operational challenges” and noted that the GST Council will review the input‑credit mechanism in its next meeting. He also promised “timely resolution of disputes” and hinted at a possible “realignment of rates” to correct the inverted duty structure, though no concrete timetable was provided.
Implications for the economy
Analysts caution that the growing reliance on import‑derived GST revenue could widen the trade deficit if domestic manufacturers do not regain competitiveness. The Ministry’s own projections suggest that without reforms, the share of GST from imports could exceed 30 percent by 2028, potentially pressuring the balance of payments.
Analysis
The revenue jump reflects the GST’s maturation and improved compliance, but the underlying shift toward import‑driven collections signals structural distortions. Input‑tax credit delays and the inverted duty structure create incentives for firms to bypass domestic supply chains, undermining the tax’s original intent to create a unified market. Prompt policy action on these fronts will be crucial to ensure that GST bolsters, rather than burdens, India’s manufacturing sector and broader fiscal health.
Sources
– “GST mop‑up grows 14 % to ₹195 lakh crore in June,” The Hindu, July 2 2026, https://www.thehindu.com/business/Economy/gst-mop-up-grows-14-to-195-lakh-crore-in-june/article71169062.ece
Story synopsis gathered from: The Hindu – National — source
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