FY26 GST revenue to exceed budget targets! States will remain net gainers; here’s what SBI report says

GST revenue collections in FY26 might exceed estimates this financial year!SBI Research expects India’s Goods and Services Tax (GST) collections to outperform targets in FY26, even as the country moves through a major rate restructuring exercise. The banking group’s latest analysis took in account for similar gains and losses across the states and concluded that the government is likely to collect more GST revenue in FY26 than what was projected in the Union Budget.“We project GST revenue for FY26 will still be higher than budgeted GST collections,” the report stated, noting that its assessment is aligned with the growth rate assumptions shared by the GST Council.A large part of the optimism stems from the recent overhaul of GST slabs. In September 2025, the Council introduced a streamlined rate regime featuring four categories: a 0% exempt slab, 5% and 18% as standard tiers, and a 40% rate specifically imposed on luxury and sin goods.According to the report cited by ANI, most states stand to benefit from this rationalisation throughout the financial year. Maharashtra is estimated to record gains of 6%, while Karnataka could see an even stronger improvement of 10.7%. “Thus, overall states will remain net gainers post GST rationalisation,” SBI Research added.Historical collections appear to back this view. Previous rate adjustments, including those implemented in July 2018 and October 2019, showed that revenue does not weaken after rationalisation. Instead, collections typically stabilise after a brief transition period and then accelerate.The analysis acknowledges that a sharp reduction in tax rates can trigger a short-lived decline of around 3–4% month-on-month, equating to roughly Rs 5,000 crore, or nearly Rs 60,000 crore on an annual basis. However, as per the report, GST receipts generally recover with consistent monthly increases of 5–6%. “In past episodes, this dynamics is translated into additional revenues of nearly Rs 1 trillion,” it added.The latest GST data reinforces the resilience of collections. In October, gross receipts rose 4.6% to approximately Rs 1.95 lakh crore, compared with around Rs 1.87 lakh crore a year earlier. Central-GST, State-GST and Integrated-GST all recorded year-on-year growth, although cess revenue dipped.For April to October of the current financial year (2025–26), GST inflows have reached about Rs 13.89 lakh crore, up 9% from Rs 12.74 lakh crore in the same period last year.