The Centre is again defending the methodology behind a headline economic growth number, this time for goods and services tax (GST) collections, after former finance secretary Subhash Chandra Garg questioned the strength of the reported increase.
Gross GST collections rose 14.8% year-on-year in August, while cumulative collections during April-August grew 11%, according to government data released 1 September. But former finance secretary Subhash Chandra Garg, in a 9 September post on X , argued that including the compensation cess collected in the year-earlier period would bring five-month growth down to 4.08%.
At the heart of the dispute is the comparable tax base. The Centre excludes compensation cess from both periods because the levy is no longer in force, while Garg argues that its withdrawal is relevant to assessing the overall change in GST-related revenue.
The Central Board of Indirect Taxes and Customs () rejected Garg’s argument, calling attempts to compare the two different tax bases “thoroughly misleading and mischievous”. It said GST growth should be calculated using the same set of levies in both periods.
The comments came after August collections rose 14.8% year-on-year to ₹1.99 trillion, while cumulative collections during April-August rose 11% to ₹10.43 trillion.
Garg estimated that including the cess collected in the year-earlier period would reduce comparable gross GST growth to 7.51% in August and 4.08% over the first five months. He also calculated net revenue growth at 1.3%.
CBIC said the reported growth rate transparently discloses compensation cess separately. The board said the year-on-year comparison uses Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST) and Integrated Goods and Services Tax (IGST) for both periods.
“A growth rate is meaningful only when it is computed on a comparable basis, that is, on the same set of levies on both sides of the comparison. Otherwise, it is like comparing apples and oranges,” the CBIC said in its X post dated 9 September.
The distinction is relevant because compensation cess was still being collected during the year-earlier period but was subsequently withdrawn.
The GST Council’s September 2025 decision brought the revised GST rates for most goods into effect from 22 September 2025, while compensation cess on specified tobacco and pan-masala products was subsequently withdrawn from 1 February 2026.
According to the government data, gross GST revenue of ₹1.99 trillion in August comprised CGST of ₹38,413 crore, SGST of ₹46,316 crore and IGST of ₹1.15 trillion. Gross domestic revenue increased 9.3%, while GST from rose 29%.
A former Indian Revenue Service (IRS) official agreed with CBIC’s stand, saying the 11% figure is a like-for-like comparison of the GST components that continue to exist.
“The ₹1.998 trillion August 2026 figure comprises CGST, SGST and IGST, excluding compensation cess. It is up 14.8% from ₹1.741 trillion in August 2025. In April-August 2025, compensation cess was still being collected, but the corresponding ₹9.40 trillion base excludes that cess. Therefore, the 11% growth for April-August 2026 is a like-for-like comparison of the GST components that continue to exist,” Sanjay Kumar, a retired IRS officer, told Mint.
But Kumar said the disappearance of the remains relevant when assessing the government’s overall GST-related revenue.
“Garg’s calculation adds the 2025 compensation cess back into the base, which naturally brings the five-month growth down sharply to his 4.08% figure. CBIC is right on the narrow statistical point. If the cess has ceased to exist, comparing current GST with last year’s GST including a levy that no longer exists is not a like-for-like measure. But there is also a legitimate analytical point that if the question is how much total GST-related revenue has grown, the disappearance of more than ₹60,000 crore of cess from the tax base is economically relevant and should not simply disappear from the discussion,” he said.
“Calling it a ‘trick’ is too strong, but presenting 11% as evidence of underlying GST buoyancy without showing the effect of the cess withdrawal is also incomplete,” he said.
