The waning sheen, Pg6

Key Highlights:

• February's GST collections rose by 8.1% year-on-year, reaching approximately ₹1.83 lakh crore.
• Import IGST surged by over 17% in February compared to the previous year, reaching about ₹47,800 crore.
• The rupee weakened by about 4% against the dollar between February 2025 and February 2026.
• Crude oil, semiconductors, copper, and aluminium constitute about 35% of India's merchandise imports.

Detailed Insights:

• The GST framework rationalization in September 2025 into a two-tiered rate structure of 5% and 18% boosted consumption expenditure.
• A five-year comparison shows a nearly 41% rise in February IGST collections from ₹33,800 crore in February 2022 to ₹47,800 crore in February 2026.
• India relies heavily on imports for semiconductors (over 90%), crude oil (over a quarter of total imports), copper, and aluminium.
• Rising global prices and a weaker rupee inflate the assessable value on which IGST is levied, increasing input costs for sectors like automobiles and appliances.
• Major states like Tamil Nadu, Maharashtra, and West Bengal lagged the national GST growth rate of 8% in February, indicating uneven domestic demand.
• Import IGST now constitutes roughly 27% of gross GST collections in April 2025-February 2026, up from about 24% in the previous year.
• Higher input costs from imports could offset the price relief from GST rationalization, potentially leading to increased costs for consumers.

Key Concepts Involved:

• GST (Goods and Services Tax): An indirect tax levied on the supply of goods and services.
• IGST (Integrated Goods and Services Tax): A tax levied on all inter-state supplies of goods and services.
• GST Rationalization: The process of simplifying the GST rate structure and reducing the number of tax slabs.

GST Rationalisation