India’s Goods and Services Tax (GST) collections for the financial year 2025–26 (FY26) are projected to exceed the Union Budget’s revenue targets, according to a recent report by SBI Research. The report attributes this optimistic outlook to the robust performance of the Indian economy, improved compliance, and the successful implementation of GST 2.0, which introduced a rationalised four-tier tax structure. Despite concerns over the impact of rate restructuring, the report affirms that most states will continue to remain net gainers under the GST regime.
The SBI report, released in early November 2025, comes at a time when India’s indirect tax system is undergoing its most significant overhaul since the original rollout of GST in 2017. The new GST 2.0 framework, which came into effect on September 22, 2025, introduced a simplified slab structure—5%, 12%, 18%, and a new 40% rate for luxury and sin goods—aimed at reducing classification disputes and improving revenue buoyancy.
📊 Projected GST Revenue Performance in FY26
| Category | Budget Estimate (₹ lakh crore) | SBI Projection (₹ lakh crore) | Variance (%) |
|---|---|---|---|
| Central GST (CGST) | ₹10.5 | ₹11.2 | +6.7% |
| State GST (SGST) | ₹11.0 | ₹11.8 | +7.3% |
| Integrated GST (IGST) | ₹7.8 | ₹8.4 | +7.7% |
| Compensation Cess | ₹1.2 | ₹1.3 | +8.3% |
| Total GST Revenue | ₹30.5 | ₹32.7 | +7.2% |
The report suggests that the GST Council’s decision to streamline rates has not adversely affected collections, as feared by some states.
🧠 Key Highlights from the SBI Research Report
| Insight | Implication for Fiscal Policy and States |
|---|---|
| GST 2.0 Rationalisation Effective | Simplified slabs have improved compliance |
| States Remain Net Gainers | Revenue sharing formula continues to benefit states |
| Higher Tax Base and Digital Integration | E-invoicing and AI-based audits boost collections |
| Maharashtra and Karnataka to Gain Most | High consumption states benefit from 40% slab |
| Revenue Neutrality Maintained | Despite rate cuts in some sectors |
The report also notes that the GST Council’s proactive engagement with states has helped address transitional concerns.
📈 State-Wise Net Gains from GST in FY26 (Projected)
| State | Net Gain (₹ crore) | Key Drivers |
|---|---|---|
| Maharashtra | ₹18,500 | High-end consumption, services sector |
| Karnataka | ₹14,200 | IT exports, manufacturing base |
| Gujarat | ₹11,800 | Industrial output, logistics |
| Tamil Nadu | ₹10,600 | Auto sector, textiles |
| Uttar Pradesh | ₹9,400 | MSMEs, FMCG consumption |
States with diversified economies and strong compliance frameworks are expected to benefit the most.
🗣️ Reactions from Policy Experts and Industry Leaders
| Stakeholder | Commentary Summary |
|---|---|
| GST Council Secretariat | “GST 2.0 is a step toward a more predictable tax regime.” |
| State Finance Ministers | “We welcome the revenue stability post-reform.” |
| Industry Chambers (CII/FICCI) | “Simplified rates have reduced compliance burden.” |
| Tax Analysts | “The 40% slab may need further scrutiny for equity.” |
The overall sentiment is positive, though some experts have called for a review of the highest tax bracket.
🧭 GST 2.0: Structural Changes and Their Impact
| Reform Element | Description | Expected Outcome |
|---|---|---|
| Four-Tier Rate Structure | 5%, 12%, 18%, 40% | Simplifies classification, reduces litigation |
| E-Invoicing Threshold Lowered | Now mandatory for businesses with ₹2 crore+ turnover | Enhances transparency and tracking |
| Input Tax Credit (ITC) Reform | Real-time matching of invoices | Reduces fraud, improves compliance |
| Quarterly Return Filing | Optional for businesses under ₹5 crore turnover | Eases burden on small taxpayers |
These reforms are designed to make GST more business-friendly while safeguarding revenue.
📌 Conclusion
The SBI Research report’s projection that FY26 GST revenues will exceed budget targets is a strong endorsement of India’s evolving tax architecture. With GST 2.0 now in place, the system appears to be delivering on its promise of simplification, compliance, and fiscal buoyancy. As states continue to benefit from the revenue-sharing model and digital tools enhance transparency, India’s GST regime is poised to become a model for emerging economies.
Disclaimer: This article is based on publicly available financial reports, government data, and expert commentary. It is intended for informational and editorial purposes only and does not constitute financial or policy advice.
