GST revenues for FY26 exceed budget targets! States will remain net winners; this is what the SBI report says – The Times of India

GST revenues in FY26 could surpass estimates this financial year!SBI Research expects India’s Goods and Services Tax (GST) to outperform targets in FY26 even as the country undergoes a major rate restructuring. The banking group’s latest analysis took into account similar gains and losses across states and concluded that the government is likely to collect more GST revenue in FY26 than projected in the Union Budget.“We expect GST revenues for FY26 to continue to be higher than budgeted GST collections,” the report said, noting that the assessment is in line with growth rate assumptions shared by the GST Council.Much of the optimism stems from the recent revision of GST slabs. In September 2025, the Council introduced a streamlined tariff regime with four categories: an exempt bracket of 0%, 5% and 18% as standard levels, and a 40% tariff specifically imposed on luxury and sin goods.According to the report cited by ANI, most states will benefit from this rationalization throughout the financial year. Maharashtra is estimated to post a 6% gain, while Karnataka could see an even stronger improvement of 10.7%. “So, on balance, states will remain net gainers after GST rationalization,” SBI Research added.Historical collections seem to support this view. Previous rate adjustments, including those implemented in July 2018 and October 2019, showed that sales did not weaken after rationalization. Instead, collections typically stabilize after a short transition period and then accelerate.The analysis acknowledges that a sharp cut in tax rates could lead to a short-term decline of about 3-4% month-on-month, which amounts to about Rs 5,000 crore, or almost Rs 60,000 crore annually. However, according to the report, GST receipts are generally recovering with consistent monthly increases of 5-6%. “In previous episodes, this dynamic translated into additional revenues of almost Rs 1 trillion,” it added.The latest GST data strengthens the resilience of collections. In October, gross revenues rose 4.6% to around Rs 1.95 lakh crore, compared to around Rs 1.87 lakh crore a year earlier. Central-GST, State-GST and Integrated-GST all posted year-on-year growth, although cess revenue declined.For April to October of the current financial year (2025-2026), GST inflows have reached around Rs 13.89 lakh crore, up 9% from Rs 12.74 lakh crore in the same period last year.