New Delhi [India], December 23 : India's tax reforms under GST 2.0 played a key role in supporting domestic consumption and economic growth in 2025, helping offset the impact of global trade disruptions, according to a report by Rubix Data Sciences.
The reforms, implemented at the end of September 2025, simplified the indirect tax regime by reducing five GST slabs into two principal rates, 5% for essentials and 18% for most goods and services, lowering compliance costs and improving business efficiency.
The report, titled, The Year That Tested Trade: How India Fared in 2025, notes that the timing of the reform proved critical as India navigated a challenging external environment marked by higher tariffs, geopolitical tensions, shipping disruptions, and rising import costs.
The impact of GST 2.0 was reflected quickly in tax collections and consumption indicators. Gross GST collections rose to Rs 1.96 trillion in October 2025, registering a 4.6% year-on-year increase, after the new tax structure came into effect.
Digital payments surged sharply around the rollout, with transaction values jumping nearly tenfold in a single day as consumers advanced purchases to take advantage of tax reductions, the report said.
The auto sector was among the biggest beneficiaries of the reforms. Automobile sales rose 41.3% year-on-year in October 2025, following GST rate reductions on vehicles, indicating a release of pent-up consumer demand.
The report further highlighted that India's external trade performance in 2025 remained under pressure. Merchandise exports were broadly flat during the year, while imports grew faster, widening the trade deficit due largely to higher energy and gold imports.
Against this backdrop, stronger domestic consumption helped stabilise overall economic activity, it said.
According to the report, GST 2.0 contributed to GDP growth of 8.2% in the July-September quarter of FY26, the highest in six quarters, alongside government capital expenditure and festive-season demand.
"Reflecting this momentum, the Reserve Bank of India revised its FY2026 GDP growth forecast upward to 7.3% from 6.8%, citing improved domestic demand conditions," it said.
Beyond short-term consumption gains, the report highlights longer-term benefits from GST 2.0, including improved formalisation of the economy, better cash flows for businesses, and lower compliance frictionfactors that could strengthen India's resilience amid prolonged global uncertainty.
With global trade risks expected to remain elevated in 2026, the report suggests domestic policy measures such as GST reform will continue to play a critical role in supporting growth even as external conditions stay volatile.
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