The effective GST rate fell to 13.13% as gross tax liability grew 13.6%. A senior official said, "Consumption has held up and the base has widened while the revenue has stabilised." The upcoming 57th GST Council meeting will now focus on making refunds faster and limiting arrest powers for taxpayers.
Gross tax liability grew 13.6% during the period, while the effective tax rate on domestic taxable supply declined from 14.55% to 13.13%, sources said.
"Consumption has held up and the base has widened while the revenue has stabilised," a senior official said, adding that the revenue shock that was feared did not occur.
Revenue growth remained positive through the 12 months. In the last four months, there has been an acceleration in revenue growth, sources said.
The 56th meeting of the GST Council, held on September 3-4, 2025, in New Delhi, replaced the multi-rate, complex structure of the indirect tax system with a relatively simpler two-rate structure of 5% and 18%, along with an additional special rate of 40% for demerit and sin goods.
The 57th GST Council meeting, which will take place on Thursday, will likely approve a host of proposals to make refunds faster and largely automated, widen input-tax credit (ITC), protect genuine buyers, bar notices for demands below Rs 10,000 and decriminalise routine offences.
The Council will seek to restrict the power to arrest under GST. Sources said tax officers should primarily be tax collectors and not law-enforcement authorities, and therefore, should not exercise arrest powers merely while pursuing tax-related matters.
However, the power to arrest would not be removed altogether. Where there is established criminality, arrest could still take place during prosecution through the courts and under judicial oversight.
Sources said the approach is rooted in a trust-based tax system, where taxpayers should not be treated as suspects unless there is evidence of criminal wrongdoing. Very few arrests have taken place so far, sources said.
Besides process reforms, the meeting will focus on a limited set of issues aimed at rationalisation and removing ambiguity.
Tax rate changes are not on the agenda for this Council meeting.
Going forward, rate changes will be considered once a year and will take effect from April 1. A stable rate structure allows businesses to price contracts over their full term and plan capital spending based on predictable assumptions. For most businesses, stability is more valuable than any single concession, sources said.