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Oct GST collection rises to ₹2.31 lakh crore

GOOD SHOW. Growth in collection from domestic sources a strong indicator of rising consumption demand, strong economic activity

Shishir Sinha

New Delhi

Driven by festival restocking and robust sales, Goods & Services Tax (GST) collections reached ₹2.31 lakh crore in October, according to data released by the GST portal on Sunday.

This is nearly 23 per cent higher than October 2025. Collections in October are related to goods consumed and services availed in September.

Domestic Sources

Collections from domestic sources rose to around ₹1.59 lakh crore, recording an increase of around 16 per cent. Collections from imported sources rose over 42 per cent to over ₹72,000 crore.

During the month under consideration, refunds were just around ₹28,000 crore, which is 6.5 per cent higher than in October last year. On account of this, net collections were over ₹2 lakh crore, or around 26 per cent higher.

Vivek Jalan, Partner at Tax Connect Advisory Services, said the trend in collections from domestic sources is a strong indicator of rising consumption demand, higher economic activity and a broad-based strengthening of India's GDP growth momentum.

At the same time, increase in GST collections from imports suggested increased procurement of raw materials and intermediate goods, reflecting expansion in domestic manufacturing and capacity utilisation.

"These trends collectively point towards a virtuous cycle of consumption, production and investment that is strengthening India's fiscal position through buoyant indirect tax collections," he said.

Festival Demand

"October collections capture the festival season demand cycle, which typically brings higher consumer spending, retail activity and movement of goods across sectors," said Manoj Mishra, Partner at Grant Thornton Bharat.

Further, he said the distinction between collections from domestic and import sources is important when assessing headline growth, as import collections can be influenced by changes in import volumes, commodity prices and the value of imported goods.

Better Compliance

Saurabh Agarwal, Tax Partner at EY India, highlighted the steady month-on-month rise in revenue indicating strong underlying consumption and improving compliance.

"At the same time, the sustained growth in import-linked collections underscores the need to further push domestic manufacturing capabilities. While production linked incentive schemes have delivered encouraging outcomes in select sectors, it may be time to revisit and recalibrate schemes in certain sectors with unutilised budgets, so that they better support the larger objective of Atmanirbhar Bharat," he said. The expectation is that collections will continue to see an upward trend.

"While the gross GST collections have crossed ₹2 lakh crore many times in recent months, festival season consumption boom has resulted in net GST collections crossing the magical figure of ₹2 lakh crore as well. Since the festival season is ongoing, this robustness is expected to continue as it ties with leading macroeconomic indicators, all of which point to a domestic consumption-driven economy, growing at a steady pace, not significantly impacted by global headwinds," said MS Mani, Partner, Deloitte India.

Umesh Nagpal, Lead, Indirect Taxation at AKM Global, said GST is increasingly serving not just as a revenue instrument but is also a reflection of economic formalisation and business activity in the country.

Monthly GST Collection Trends

Month	Gross Revenue (₹ lakh cr) PDF	Growth Rate (%) PDF	Domestic (₹ lakh cr) PDF	Growth Rate (%) PDF
April	2.43	8.7	2.11	7.3
May	1.94	1.2	1.67	3.3
June	1.95	13.9	1.62	11.2
July	2.11	15.4	1.81	15.8
August	2.00	14.8	1.68	8.3
September	2.03	14.7	1.75	18.1
October	2.31	22.9	2.03

Banks holding off hiking term deposit rates by relying on CDs

BEYOND REQUIRED. Net incremental CD issuance of ₹19,905 cr in Oct as weighted average rate rises to 6.93% By K Ram Kumar

• Resource Mobilisation through CDs: Banks seem to be holding off on hiking term deposit rates in the wake of the hike in repo rate and shrinking liquidity surplus by relying on certificate of deposit (CD) issuances for resource mobilisation.

• Issuance Figures: While CDs aggregating ₹278,290 crore matured in October 2026, fresh issuances were higher at ₹298,195 crore, resulting in net incremental issuance of ₹19,905 crore.

• Beyond Replacement: This indicates that banks raised resources beyond the amount required to replace the maturing CDs.

Rising Rates

• Weighted Average Rate (WAR): The weighted average rate (WAR) of CD issuances in October 2026 rose to 6.93 per cent even as the WAR on CDs that matured in the month was at 6.57 per cent.

• Definition & Maturity: CDs are negotiable money market instruments issued by banks and all-India financial institutions in demat form or as usance promissory notes, with maturities ranging from seven days up to one year.

• Treasury Insights: V Rama Chandra Reddy, Head of Treasury, Karur Vysya Bank, observed that the net incremental issuance of CDs and rise in yields (an upward repricing of about 36 basis points) suggested that banks were not merely rolling over existing liabilities but were actively securing additional short-term resources at higher rates. While some banks issued CDs in excess of their maturities, others maintained a more conservative issuance approach.

• Widening Term Premium: Reddy noted, "A particularly noteworthy feature is the widening term premium. One year CD rates are currently trading at around 250 basis points (bps) above the prevailing repo rate. Such a significant spread reflects a combination of factors—liquidity premium (banks are willing to pay more to secure funds for specific tenors rather than depend on uncertain overnight liquidity); and interest rate expectations (of further monetary tightening and a potentially higher terminal rate are pushing up term funding costs)".

Funding Pressures

• Refinancing & LCR: Further influences on the spread include refinancing requirements (banks with higher credit-deposit ratios and significant maturity obligations are willing to pay a premium to ensure continuity of funding) and liquidity and regulatory considerations (the need to maintain adequate Liquidity Coverage Ratio buffers and manage wholesale funding concentration influencing liability decisions).

Funding Certainty

• Short-Term Preference: Banking industry experts say mopping up short-term resources (of up to one year duration) at relatively higher rates is a preferred option compared to upping term deposit rates and staying locked in at those rates for a longer period.

• Cost of Certainty: Reddy stated that the CD market reflects not just the prevailing cost of money but also the premium banks are willing to pay for funding certainty.

• Repo Rate Transmission: After the RBI's rate setting panel hiked the repo rate by 25 basis points from 5.25 per cent to 5.50 per cent on October 7, while there has been a one-to-one transmission to loans linked to the external benchmark lending rate, term deposit rates remain unchanged.

LINE & LENGTH

T.C.A. SRINIVASA RAGHAVAN

A loud and strong "brokers' ki fauj" has been reverberating that the increase in the long term capital gains tax in 2024 is solely responsible for the stock market's stagnation since September that year and for the massive FII withdrawals of money since March this year. It's also what economists call post hoc, ergo propter hoc (after this, therefore because of this) approach to proof.

It's also what I call plausible nonsense because it's a single causal explanation for a complex problem which the simple minded and uninformed can easily understand. Most members of the broking community fall in this category.

Someone in the government needs to tell them that there are two separate issues here. One is the stagnant stock market which is due to a lot of factors. The other is FII withdrawals which too is due to many factors.

But, as the land reform and farm bill showed, the Modi government likes to be bullied, or so it seems. Both reforms would have done a lot of good, but so loud was the disinformation that the government withdrew both. The lesson has not been lost on the broker lobby.

True, the problems pertain to the returns from investment in the equity market. But how true is it to say that a slight increase of 2.5 per cent is responsible for such low returns that FIIs are pulling their money out so strongly?

The broker lobby also wants to exempt FPIs from LTCG and STT as well. Sure. But would it like to suggest an alternative source of revenue? Revenue from them is around ₹1.2 lakh crore. The oil and fertilizer subsidy bills together are nearly twice that.

And there is also the counter question: if the LTCG is lowered to 10 per cent, or removed entirely, will the stock market revive and, therefore, will FII inflows revive? If you believe that you will also believe that when your car has stalled, changing the upholstery will restart it.

So if I were the finance minister, I would simply say "down, boy".

THE REAL REASON

How America punishes India

Why is every episode of capital flight preceded by India annoying America?

That there is a massive outflow of dollars because the FIIs are dumping Indian equities is true. That this is causing the rupee to depreciate precipitously is also true. It's also true that the RBI is spending a lot of forex reserves to prop the rupee up. And few would disbelieve you if you said that, to some extent at least, the forthcoming assembly elections in UP have created pressure to make sure that the rupee doesn't slide to 100 per dollar. It is instructive to look back at history in this regard and look for patterns. And, as I see it, the pattern is this: every episode of capital flight from India and rupee depreciation has been preceded by an oil price increase and something we did to annoy Uncle Sam.

There are no exceptions to the latter reason. You annoy America and it squeezes you where it hurts the most, namely, your need for dollars and your inability to earn enough of them.

It was thus in the second half of the 1950s, 1960s, 1970s, 1980s, 1990s, and the 2000s. The same thing has come now in the second half of this decade.

POST HOC, ERGO PROPTER HOC?

In the 1950s we refused to allow American investment into Indian industry. In the 1960s we vociferously opposed America's war in Vietnam. In the 1970s we went nuclear.

The 1980s were a bit alright because we were dangling carrots, but in 1990 we didn't extend practical support to America in its war on Iraq. Then in 1998 we exploded another nuclear weapon. Manmohan Singh was more careful but he made too many promises that he could not keep. Barack Obama was most annoyed. And so on till this year when Modi suggested, by saying nothing, that Donald Trump was lying about his role as a mediator in the four day dust up with Pakistan.

And these are only the big examples. There are dozens of smaller ones of India and America growling and snarling at each other.

But hang on. Can I also be accused of making the post hoc, ergo propter hoc mistake? Yes, probably. But contrariwise, we also saw how, between 2000 and 2012 when we were nice to the Americans, they heaped both money and praise on us.

The short point is that, when it wants to, America can cause severe economic damage to India by squeezing the supply of dollars to us. That's all it takes. The evidence is altogether too strong not to at least mention.

The moral of the story is not that we should always kowtow to America. That's not a guarantee that we will be rewarded with goodies.

But we should also not jump to feeble-minded conclusions that our dollar problems are solely because of some slight increase in taxes on financial products. That's just lobbying by guys who have to pay the tax.

Here is a comprehensive summary and reproduction of the key data, findings, and arguments from the article "Data centre biz: What's in it for India?" (published in Businessline, Quantum section).

The article provides an unvarnished assessment of India's artificial intelligence and data center landscape, drawing insights from a report by the US-based research and advisory firm Rhodium Group titled "Hyperscaler Heaven: A reality check on India's AI ambition and geopolitical alignment" (authored by Ankit Tiwari and Reva Goujon).

1. The Infrastructure Gap: Massive Capital vs. Low Domestic Demand

• Investment Surge: India has attracted over $300 billion in data centre investment commitments within the past year, with operational capacity projected to triple (or potentially grow six-fold) by 2030.

• The Demand Mismatch: Despite massive construction, the demand side is lagging:

  • Subsidised graphics processing units (GPUs) under the IndiaAI Mission are reportedly running at roughly 20% utilisation, even though they are priced well below market rates.

  • India’s largest GPU-as-a-service operator, Yotta, derives an estimated 80% of its revenue from foreign clients and distributes capacity through Nvidia's global compute marketplace (DGX Cloud/Lepton).

  • Domestic enterprise AI workloads continue to route predominantly through global cloud providers rather than local servers.

2. Employment Reality and State-Level Pressures

• State governments have offered major incentives—including land, power waivers, and capital subsidies—justified largely on employment grounds. However, a significant gap exists between promises and outcomes:

  • For example, while an Andhra Pradesh IT Minister cited 2 lakh jobs from a single project, the state's own agency estimated only 200 direct operational positions.

  • Construction employment spikes temporarily during the build phase and then disperses.

  • Consequently, states like Maharashtra, Tamil Nadu, and Karnataka have begun revising their green energy and incentive frameworks due to mounting political and economic pressure.

3. Geopolitical Alignment at the Infrastructure Level

• While India officially maintains a non-aligned diplomatic stance in the US-China technology race, the Rhodium report argues that decisions at the infrastructure level have already tipped the scales:

  • India has aligned its semiconductor export control lists with US controls.

  • It has adopted "trusted-source" requirements for telecom networks that effectively exclude Chinese equipment.

  • India's positions in international spectrum allocation forums closely track the US-led coalition rather than China.

• Beijing's Response: China has taken notice, recalling engineers from Foxconn plants in India, restricting tunnel boring machine exports, and selectively deploying rare-earth controls.

4. Sovereign Models: High Ambitions, Market Size Constraints

• AI labs backed by the IndiaAI Mission have focused on building large language models (LLMs)—most notably Sarvam AI’s 105B parameter model.

• The Critique: While the rationale for native Indic-language training (Hindi, Tamil, Bengali) is technically sound, the domestic addressable market for Indic-specific AI products is not large enough to fund frontier model development. Meanwhile, better-capitalized foreign labs are rapidly closing the performance gap.

5. The Real Strength: The IT Services Layer

• The article highlights that India's true competitive edge lies in the services layer, an area that receives the least public policy attention:

• Major IT firms like TCS and Infosys reported annualized AI services revenues at 7.5% and 8% of total revenue respectively, growing at double-digit rates while overall IT revenue growth hit a six-year low.

• The "Forward-Deployed Engineer" Advantage: Customizing AI deployment to specific client workflows requires deep institutional context. An entry-level forward-deployed engineer based in India costs under a tenth of the equivalent role in the US.

• Citing a 2025 MIT study, 95% of generative AI pilots fail not due to poor models, but because of integration lags and knowledge gaps (legacy systems, data architecture). Indian IT firms have built this exact context over decades of enterprise relationships.

• Infosys estimates the total addressable AI services market will reach $300–400 billion by 2030

Overview of India's Cruise Tourism Expansion

India’s cruise tourism sector is rapidly scaling up, keeping pace with the Centre's strategic goal to double cruise passenger traffic to one million by FY 2029. While geopolitical tensions in the Red Sea have led to a temporary dip in foreign port calls, robust domestic demand is powering the industry forward.

Key Drivers & Market Trends

• Surging Domestic Traffic: Domestic cruises account for the vast majority of the momentum, representing 78% of ship calls and over 90% of total passenger traffic in FY26.

• Fleet Expansion: Industry players are actively expanding capacity. Cordelia Cruises inducted its second vessel, Cordelia Sky, in late October and is slated to add a third ship, positioning the company to support the national 1-million passenger milestone.

• Infrastructure Upgrades: Major ports are rolling out modern facilities to accommodate higher footfall:

  • Mumbai, Chennai, and Visakhapatnam have established modern cruise terminals over the past three years. Mumbai's terminal has also introduced a multi-level experience centre for dining, shopping, and entertainment.

  • Goa's Mormugao Port is developing a 13-acre cruise terminal (backed by an investment of ₹185 crore) capable of berthing four vessels simultaneously, with completion expected by 2027.

  • Cochin Port, a home port for the Cordelia Empress, is preparing a detailed project report for a new mega cruise terminal.

Industry Challenges & Policy Reforms

Despite strong domestic fundamentals, global cruise operators highlight key hurdles that need to be addressed to unlock India's full potential as an international cruise hub:

• Tax and Regulatory Frameworks: Global lines like MSC Cruises note that competitive tax structures comparable to international cruising standards are essential for homeporting vessels in India.

• Streamlined Processes: Government officials are introducing progressive measures—such as e-group visit visas, simplified shore leave passes, and QR-code-based digital immigration and customs clearance—to boost competitiveness.

This video provides an in-depth look at how India's cruise sector is transforming into a major vacation and business opportunity, driven by shorter itineraries and rising domestic demand.

Cyclone Murasu all set to intensify further

Vinson Kurian

Thiruvananthapuram

The deep depression over the south-west and adjoining south-east Bay of Bengal moved west-northwestwards with a speed of 23 km/hr during the past six hours ending 11:30 am on Sunday, and intensified into Cyclone Murasu.

The cyclone lay over the south-west and adjoining west-central Bay, located approximately:

• 560 km east-southeast of Chennai

• 660 km south-southeast of Visakhapatnam

• 630 km east-southeast of Nellore

• 640 km south-east of Machilipatnam

• 680 km east-southeast of Ongole

  (all in Andhra Pradesh)

Forecast and Track

The India Meteorological Department (IMD) expects Murasu to intensify further into a severe cyclone over the west central Bay around Monday morning. Thereafter, it may move northwestwards and cross the south Andhra Pradesh coast as a severe cyclone with wind speeds of 100-110 km/hr, gusting to 120 km/hr between Nellore and Narsapur during midnight to the early hours (4:00 am) of Tuesday.

Murasu marks the second cyclone over the Bay during the ongoing North-East monsoon. Its approach comes at a particularly vulnerable time for coastal Andhra Pradesh following its predecessor, Very Severe Cyclone Arnab, which made landfall near Narsapur on October 28 and left the region contending with its aftermath.

Updates available at 8:30 am on Sunday from artificial intelligence-based forecasting models pointed to the possibility of rapid intensification within six to 12 hours, while other models indicated a more gradual strengthening with the system attaining subsequent stages of development by Monday morning.

Rainfall Forecast by Region

The IMD has forecast an expanding zone of heavy to extremely heavy rainfall as Murasu approaches:

• Coastal Andhra Pradesh: Likely to experience light to moderate rainfall at many places, with heavy rainfall at isolated places; intensity is expected to increase on Monday.

• Rayalaseema: Likely to get light to moderate rainfall at most places, accompanied by heavy to very heavy rainfall at isolated places on Monday and Tuesday.

• Tamil Nadu: Expected to witness light to moderate rainfall at many places, with heavy rainfall at isolated places on Monday and Tuesday.

• Telangana: Light to moderate rainfall is likely at many places, with heavy rainfall at isolated places on Monday and Tuesday.

• South Odisha: Likely to see light to moderate rainfall at many places, with heavy rainfall at isolated places on Monday, increasing in intensity on Tuesday and Wednesday.