February’s Goods and Services Tax (GST) collections have once again delivered a strong headline number. Gross revenues touched about ₹1.83 lakh crore, marking an 8.1% year-on-year increase. Much of this rise has been attributed to stronger consumption following the rationalisation of GST into a simpler two-tier structure of 5% and 18% in September 2025. Lower rates on consumer non-durables helped sustain demand in sectors such as automobiles, appliances, mobile phones and tourism-linked services. At first glance, the numbers appear to confirm a resilient consumption cycle.
A closer look at the composition of these revenues, however, reveals a more complex picture. A significant share of February’s GST growth came from import Integrated GST (IGST), which rose sharply by more than 17% compared with the same month last year. Import IGST collections reached approximately ₹47,800 crore, up from about ₹40,800 crore in February 2025. Over a longer horizon, the rise is even more striking: February collections have increased by nearly 41% since FY22.
This surge must be viewed alongside another development — the steady depreciation of the rupee. The currency weakened by roughly 4% against the U.S. dollar between February 2025 and February 2026, and by about 6.2% between April 2025 and February 2026. Because most imports are dollar-denominated, a weaker rupee automatically raises the taxable value on which IGST is levied.
India’s import dependence amplifies this effect. The country imports more than 90% of its semiconductor requirements and relies heavily on crude oil, copper and aluminium — commodities that together accounted for about 35% of merchandise imports in February 2026. Rising global prices, along with a shift in crude sourcing from discounted Russian barrels to supplies from the U.S. and West Asia, have likely increased the average import bill.
The result is a paradox. While GST collections appear buoyant, a growing share of revenues is being driven by higher import values rather than uniformly strong domestic demand. Durable tax buoyancy must ultimately rest on broad-based domestic consumption, not merely on rising import valuations driven by currency weakness and global price cycles.
