GST rate rationalisation to cause Rs 10,664-crore shortfall in IGST receipts: GTRI Report

New Delhi [India], 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.

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