Vijayawada: The implementation of the landmark GST 2.0 reforms has led to a significant contraction in Goods and Services Tax (GST) revenues for Andhra Pradesh in November 2025. The state recorded a sharp decline following sweeping rate reductions aimed at stimulating the economy, with net collections falling to ₹2,697 crore.
GST 2.0 Impact: A Double-Edged Sword
The state's financial machinery felt the immediate impact of the revised tax structure, which saw reduced rates on a wide array of essential and consumer goods. The net GST collections for November 2025 stood at ₹2,697.32 crore, marking a substantial 4.60% decline from the ₹2,827.24 crore collected in the same month of the previous year. This dip is directly attributed to the GST 2.0 rate cuts on automobiles, cement, fast-moving consumer goods (FMCG), consumer electronics, and dairy products, which became effective from September 22, 2025.
Chief Commissioner of Taxes, Babu Ahmed, explained the paradox behind the numbers. While the lower tax rates successfully boosted economic activity and transaction volumes, the overall revenue yield per transaction decreased. "The fall in SGST resulted from GST 2.0 rate reductions," Ahmed stated, noting that State GST (SGST) alone saw a 7.35% year-on-year decline, dropping to ₹1,109.17 crore from ₹1,197.14 crore in November 2024.
Sector-Wise Breakdown and Cyclone Effect
The revenue picture was mixed across different tax streams. The Integrated GST (IGST) settlement also fell by 2.57% to ₹1,588.15 crore. This was partly due to increased SGST Input Tax Credit (ITC) adjustments by automobile manufacturers and certain accounting exclusions. Revenue from petroleum products witnessed a slight downturn of 1.06%, collecting ₹1,306.61 crore. Authorities cited Cyclone Montha as a key factor, as it severely disrupted trade, transportation, and vehicular movement across Andhra Pradesh's coastal belt.
Similarly, collections from VAT on liquor fell by 4.82% to ₹70.40 crore. However, a bright spot emerged in professional tax collections, which surged by an impressive 46.22% to reach ₹43 crore, indicating robust compliance in that segment.
Compliance Cushions the Blow, Long-Term View Optimistic
Despite the headline decline, state tax officials highlighted that the situation could have been more severe. Strict enforcement and compliance measures, coupled with the volume growth from lower rates, helped cushion the full impact of the rate cuts. The total commercial taxes revenue, which includes collections under other acts, amounted to ₹4,124 crore, showing a relatively moderated year-on-year decline of 3.17%. This figure represented 74% of the state's revenue target for the period.
Chief Commissioner Babu Ahmed offered a broader, more optimistic perspective by looking at the cumulative performance. He claimed that the state government managed to withstand the initial shock of the reforms. For the financial year up to November 2025, net GST collections actually grew by 5.80%. This growth, he asserted, was fueled by heightened economic activity within the state and the financial discipline instilled in taxpayers through vigilant compliance mechanisms.
The November 2025 collections, which reflect business transactions from October 2025, underscore the transitional phase following major fiscal policy changes. While the short-term data shows a dip, the administration's focus remains on the long-term benefits of a simplified tax structure with lower rates, hoping it will lead to sustained economic expansion and a broader tax base in the coming years.
