AP maintains revenue stability despite GST 2.0 rate cuts and cyclone impact

Andhra Pradesh has managed to maintain reasonable revenue stability despite the challenges posed by the new GST 2.0 rate structure and the disruptions caused by Cyclone Montha. According to State Tax Chief Commissioner Babu, the state recorded 5.80% growth in net GST collections up to November 2025. However, the effects of the rate cuts and the cyclone were clearly visible in the November 2025 collections, which dropped to ₹2,697 crore, marking a 4.60% year-on-year decline. Officials noted that this overall resilience was made possible by stronger economic activity in the state, tighter enforcement, and improved taxpayer compliance.

The GST 2.0 reforms, which came into effect on September 22, 2025, significantly influenced revenue patterns. Tax rates were reduced on key sectors such as automobiles, cement, Fast-Moving Consumer Goods (FMCG) products, consumer electronics, and dairy goods. Compensation cess was also removed on most goods except tobacco. These changes boosted transaction volumes but naturally reduced the tax revenue generated from each sale. November’s GST figures largely reflected October’s business activity, a period when the new rate structure began to reshape tax inflows. Officials said that although most revenue categories recorded a dip, professional tax remained a strong performer.

State Goods and Services Tax (SGST) revenue in November stood at ₹1,109.17 crore, which is 7.35% lower than the ₹1,197.14 crore collected in November 2024. The decline is primarily due to the rate reductions under GST 2.0. Integrated Goods and Services Tax (IGST) settlements also saw a mild drop from ₹1,630.10 crore to ₹1,588.15 crore, a fall of 2.57%. This was driven by higher SGST and Input Tax Credit (ITC) adjustments and the removal of certain IGST reversals. Petroleum revenue was affected significantly by Cyclone Montha, which disrupted transportation, business activity, and vehicle movement across coastal districts. As a result, petroleum-related revenue fell from ₹1,320.57 crore to ₹1,306.61 crore, a drop of 1.06%.

Other revenue streams, such as liquor Value Added Tax (VAT), also shrank. Liquor VAT collections declined from ₹74 crore in November 2024 to ₹70.40 crore in November 2025, a decrease of 4.82%. The one major exception to the overall declining trend was profession tax, which showed remarkable improvement. Collections rose from ₹29.41 crore to ₹43 crore, recording an impressive 46.22% year-on-year growth. Authorities credited this increase to improved compliance efforts led by the department.

The state’s total commercial tax revenue for November 2025, including all Acts, amounted to ₹4,124 crore, reflecting a 3.17% decline compared with the previous year. Despite the dip, officials stated that the combined effect of enforcement measures, compliance drives, and steady economic activity helped the state maintain revenue stability during a transition period marked by policy changes and natural disruptions. They added that the department would continue its efforts to safeguard revenue in the months ahead, ensuring financial resilience even under challenging circumstances.