Gross GST revenue for May 2026 rises 3.2% year-on-year but slips sharply from April's record high; imports drive growth as domestic collections dip

Numbers Down From Record High

India's gross GST collections eased to Rs 1.94 lakh crore in May 2026, pulling back from a record Rs 2.42 lakh crore logged in April, though the figure remained 3.2 per cent higher than the Rs 1.88 lakh crore collected in the same month last year. The Finance Ministry released the official data on Monday, June 1.

The moderation was widely anticipated. April's numbers had been buoyed by year-end business activity and tax settlements — a seasonal spike that doesn't carry over into May. Experts noted the softer numbers were largely expected due to the high base effect and seasonal adjustments following the financial year-end surge.

Imports Carry the Month

The real story in May's data was the sharp divergence between import-driven and domestic collections. IGST collection from imports rose 19.1 per cent during May to Rs 59,654 crore, signalling expansion in industrial capacity, the Finance Ministry stated.

Sources said that over 66% rise in lithium-ion battery imports underlines India's deepening integration into the EV and grid storage ecosystem. Coal collections rose by more than 391%, reflecting heightened fuel and coking coal requirements of steel plants, cement kilns, and thermal power generation.

On the domestic side, however, the picture was less encouraging. Gross domestic revenue took a slight dip of 2.6 per cent, falling to Rs 1,34,530 crore in May 2026 from Rs 1,38,102 crore in May 2025.

Net Collections and Refunds

After adjusting refunds, net GST revenues in May rose 3.3 per cent to about Rs 1.67 lakh crore. Total refunds for the month grew 2.6 per cent to Rs 27,281 crore, of which domestic refunds accounted for Rs 17,030 crore.

Adjusting for a Rs 10,000 crore one-time payment made by a telecom operator for spectrum allocation in May 2025, gross GST collection this May would be higher by about 9% and net collection higher by about 10.1%. This is a significant qualifier, as last year's base had been artificially elevated by that one-off entry.

Component-Wise Breakup

GST collections from domestic transactions reached Rs 1.34 lakh crore in May, comprising Rs 37,397 crore in CGST, Rs 45,143 crore in SGST, and Rs 51,990 crore in IGST.

The growth was broad-based across all major goods and services categories, with taxable supplies in the goods sector rising 26.9 per cent and services sector growing 22.2 per cent, government sources said.

State-by-State Picture

State-wise performance varied across the country. Maharashtra remained the largest contributor to domestic collections despite a flat growth rate, generating Rs 29,141 crore compared to Rs 29,236 crore last year. Karnataka registered a marginal increase of one per cent to reach Rs 13,130 crore, while Gujarat also posted a one per cent growth to collect Rs 11,206 crore.

On the other end, Lakshadweep saw its collections plunge 82 per cent to just Rs 1 crore, and Sikkim recorded a 53 per cent drop, with revenue falling to Rs 200 crore.

Cumulative Picture Remains Positive

Despite the month-on-month dip, the broader fiscal trajectory remains intact. Gross GST collection for the first two months of FY2026–27 totals Rs 4.37 lakh crore, up 6.2% from Rs 4.11 lakh crore during the same period in FY2025–26.

"This cumulative year-on-year performance is healthy and in the right direction to achieve the full-year GST revenue target," sources said. The government has budgeted to mop up Rs 10.19 lakh crore from GST in the current fiscal.

India Slashes Import Duty to Zero on 40 Chemicals, Polymers

Three-month exemption on basic customs duty effective April 2; ammonium nitrate cess also removed

Govt Announces Major Relief

The Ministry of Finance (Revenue Department) has issued two extraordinary notifications in the Gazette of India on April 1, 2026, bringing significant relief to the petrochemical industry. Basic customs duty on 40 key chemicals, monomers, and polymers has been reduced to zero. A separate notification has also zeroed the Agriculture Infrastructure and Development Cess on ammonium nitrate. The exemptions take effect from April 2 and will remain in force until June 30.

Scope of the Exemption

The zero-duty list covers a wide range of raw materials used across multiple industries. These include specialty chemicals, plastic inputs, resin intermediates, and polymer compounds. According to the gazette notifications, the move aims to reduce manufacturing costs and stabilise downstream product prices. The exemption is temporary but carries strong signals for policy support to domestic industry.

Who Benefits Directly

Plastic and polymer manufacturers stand to gain the most from lower input costs. Paint, coating, and resin producers will see immediate reduction in production expenses. Fertiliser and pharmaceutical companies will now access cheaper raw materials. The textile, packaging, and automobile sectors are also expected to receive indirect benefits through lower intermediate goods prices.

Official Statement from Industry Body

Yogesh Mehta, President of the Association of Industries Madhya Pradesh, welcomed the decision. “The central government has taken this step in public interest. Many industries in Madhya Pradesh will benefit directly. This is like a lifeline for the sector,” Mehta said. He added that reduced import costs will boost competitiveness of domestic manufacturing units and keep final product prices under control.

Impact on MSME Segment

Small and medium enterprises (MSMEs) are expected to see special relief from the duty cut. Most MSME units depend heavily on imported raw materials due to limited domestic sourcing options. Lower customs duty will ease working capital pressure and allow smaller players to quote more competitive prices. Industry watchers believe this could help revive demand in downstream markets.

Background and Policy Context

The government has periodically used temporary duty exemptions to manage supply-side inflation and support manufacturing. Similar relief was extended to select chemicals during the post-pandemic recovery phase. However, the current three-month window is shorter than previous interventions. Officials indicated the time limit is designed to assess impact before considering any extension.

What Happens Next

The exemptions will remain operational through the first quarter of the fiscal year. Industry bodies are expected to submit feedback to the revenue department by mid-May. Based on utilisation patterns and price trends, the government may either extend the zero-duty regime or replace it with a concessional rate. Meanwhile, importers and manufacturers are advised to align their procurement cycles within the June 30 deadline.