The overall effective GST rate has come down to 10.84% from 11.74%, while the effective rate of tax on domestic supplies has also declined, to 13.13% from 14.55%, according to officials.
The decline comes even as the GST base continues to expand. Taxable supply has risen 25.8%, while GST revenue grew 11% in FY2026-27.
The significance goes beyond a lower tax burden. It shows that GST is increasingly generating revenue through a broader tax base rather than higher rates.
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Consumer supplies reported in the GST system have grown 26.7%, faster than taxable supply overall — a trend the GST Council sees as an indication of better reporting.
The combination of a lower effective rate, expanding taxable supplies and rising revenues points to a GST system that is capturing more economic activity without relying primarily on higher rates.
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For businesses and consumers, a lower effective rate can mean lower tax incidence and greater predictability. For the government, a widening tax base can help sustain revenue growth without repeatedly raising rates.
That is an important shift as GST completes nine years. The focus is moving towards better compliance, wider reporting, invoice-level matching and more efficient administration.
And that is central to the next phase of GST 2.0 — less about changing rates and more about making the system broader, simpler, more transparent and more efficient.
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