GST Revenue Trends: States' Performance Unveiled
The recent release of GST revenue data has brought to light a complex scenario for Indian states. For October 2025, the government reported a total GST collection of ₹1,95,936 crores, reflecting a 4.6% increase compared to October last year. This boost is partly attributed to the festive spending during Diwali, a time when many consumers make significant purchases.
However, the report also indicates a stark disparity in revenue generation among states. Major industrial hubs like Maharashtra, Karnataka, Gujarat, Tamil Nadu, and Haryana together contributed over 40% of the total GST revenue. Their economic activities underscore their roles as consumption and production centers in India.
On the flip side, a significant number of states and union territories—20, to be exact—saw their GST revenues contract in October 2025. This trend raises concerns, especially since many states have voiced their dissatisfaction with GST revenues since its implementation in 2017. An independent analysis by PRS Legislative Research highlights that total GST revenues have consistently been lower than the previous tax regime.
According to the analysis, aggregate revenue from taxes prior to GST was about 6.5% of GDP in 2015-16. This figure has dwindled to 5.5% of GDP in the 2023-24 fiscal year. Additionally, in 2020-21, the 15th Finance Commission estimated that the GST-to-GDP ratio would stabilize around 7% in the medium term, a target that seems increasingly difficult to achieve.
The decline in overall GST revenues compared to pre-GST levels has left several states in a worse financial condition. Analysis suggests that before GST, states received an average of 2.8% of GDP from various taxes that were later subsumed under the GST framework. Since the introduction of GST, the average State GST (SGST) as a percentage of GDP has remained below this historical average.
Nevertheless, the impact of GST has not been uniform across all states. While most states experienced revenue decreases, a few, particularly in the northeastern region like Mizoram, Nagaland, Sikkim, Meghalaya, and Manipur, have shown improvements in their tax ratios compared to the pre-GST era. Conversely, states such as Punjab, Chhattisgarh, Karnataka, Madhya Pradesh, and Odisha have faced the most significant declines in revenue. This highlights the uneven effects of GST across India's diverse economic landscape.
