GST collections in FY26 likely to surpass budget estimates
What's the story
The Goods and Services Tax (GST) revenue for the financial year 2026 (FY26) is expected to exceed budgeted collections, according to a report by SBI Research. The projection is based on growth rate assumptions released by the GST Council. The report also notes that most states are likely to see positive gains throughout the fiscal year after tax rationalization measures were implemented.
Rate rationalization
States likely to remain net gainers after GST rationalization
The new GST rate structure, introduced in September 2025, features a two-tier system of 5% and 18%, along with an exempt slab (0%) and a new demerit rate of 40% for luxury and sin goods. SBI Research's report predicts that Maharashtra will gain by 6%, while Karnataka will gain by as much as 10.7%. This suggests that states will remain net gainers after the GST rationalization process.
Past trends
Past instances show revenue collections bounce back after adjustment
Past instances of GST rate changes, such as those in July 2018 and October 2019, show that rationalization does not necessarily hurt revenue collections. Instead, it leads to a temporary adjustment period followed by improved inflows. The report notes that while an immediate rate cut can lead to a short-term dip of about 3-4% month-on-month (around ₹5,000 crore or annualized ₹60,000 crore), revenues usually recover with steady growth of 5-6% per month.
Collection data
Gross GST collections rose by 4.6% in October
In October, gross GST collections rose 4.6% to about ₹1.95 lakh crore from around ₹1.87 lakh crore in the same month last year, official data released on November 1 showed. Central-GST, State-GST, and Integrated-GST collections grew year-on-year (YoY) while cess collections declined YoY. For the current fiscal (2025-26), the GST inflows have reached about ₹13.89 lakh crore from April to October, up 9% from ₹12.74 lakh crore during the same period last fiscal year.