Srinagar, Jan 1: Jammu and Kashmir’s Goods and Services Tax (GST) collections declined by 8 percent in December 2025, underscoring a prolonged slowdown in economic activity in J&K, even as GST revenues at the national level showed modest growth driven largely by a surge in imports.
Official figures show that GST collection in J&K stood at Rs 592 crore in December 2025, down from Rs 642 crore in December 2024.
This marks the third consecutive month of decline in GST revenues for J&K.
In November, GST collections had dropped by 14 percent to Rs 677 crore compared to Rs 789 crore in the corresponding month last year.
October had also recorded a downturn, with collections falling 9 percent to Rs 551 crore from Rs 608 crore a year earlier.
The slide in revenues began earlier in the year.
In May, J&K’s GST collection plunged to Rs 422 crore, a steep fall of over Rs 360 crore compared to April’s Rs 789 crore mop-up, reflecting a sharp contraction in economic activity that officials say has had lingering effects on trade and commerce.
Officials attribute the sustained decline to subdued business sentiment and weak consumption, particularly after the April attack, which impacted tourism, retail trade, and allied services – key drivers of the local economy.
“Trade and commercial activity has remained tepid for several months, especially in tourism and retail, and that is clearly reflected in GST numbers,” an official said.
The slowdown in J&K stands in contrast to the national GST picture.
Across India, central and state governments collected Rs 1.75 trillion in GST in December before adjusting for refunds, registering a 6.1 percent increase over the year-ago period.
After refunds, net GST revenue stood at Rs 1.46 trillion, up 2.2 percent year-on-year.
A significant driver of this growth was a sharp rise in import-related taxes.
Integrated GST (IGST), which is levied on imports, grew by nearly 20 percent annually to Rs 51,977 crore in December, pointing to strong external trade flows.
Economists note that a large share of imports feed into export-oriented production.
IGST is imposed on imports to ensure that imported goods are taxed at the same rate as domestically produced goods subject to GST.
Basic Customs Duty (BCD), which provides tariff protection to the domestic industry, is levied separately, and its proceeds are not included in GST collections.
Officials said this import-led buoyancy in GST collections has had a limited spillover effect in Jammu and Kashmir, where the economy is less integrated with large-scale manufacturing and export supply chains.
The revenue pressure in J&K has also been compounded by GST rate rationalisation.
At a FICCI event held in Srinagar in October, Chief Minister Omar Abdullah said that the revision of GST rates undertaken earlier this year was likely to reduce J&K’s overall fiscal earnings by Rs 900 crore to Rs 1000 crore.
A senior central government official said that while GST growth at the all-India level has been strong in sectors such as FMCG, pharmaceuticals, food products, automobiles, medical devices, and textiles – where rate rationalisation was implemented – the benefits have been uneven across regions.
“J&K’s economy is heavily dependent on services like tourism and retail, which have seen a slower recovery. That explains why the local GST performance is weaker compared to the national trend,” the official said.
With GST forming a major component of J&K’s own tax revenue, officials said the continued dip could pose challenges for fiscal planning in the coming months, particularly as the government looks to sustain public spending and revive growth.