New Delhi – India's Goods and Services Tax (GST) revenue for the Financial Year 2026 (FY26) will likely surpass government budget estimates, according to a recent analysis by SBI Research. This optimistic forecast comes despite a significant restructuring of GST rates introduced in September 2025, which is expected to initially cause a temporary dip in collections. T^[1][2][3][4]he report highlights that states will emerge as net gainers from these tax reforms. ^{[1][2][3][4][5]}### Optimistic Projections Amidst Tax Reforms SBI Research projects that GST revenue for FY26 will be higher than the budgeted collections. This assessment aligns with growth rate assumptions provided by the GST Council. A^[1][2][3][4] key reason for this positive outlook is the recent overhaul of GST slabs, implemented in September 2025. T^[2][4]his new system streamlines tax rates into a four-tier structure: a 0 percent exempt slab, standard rates of 5 percent and 18 percent, and a new 40 percent rate specifically for luxury and sin goods. ^[2][3][4]The rationalization of GST rates aims to simplify the tax system and improve compliance. While such changes can sometimes lead to short-term revenue fluctuations, SBI Research expects a robust recovery. T^[1][2][4]he report suggests that the government will collect more GST revenue in FY26 than initially projected in the Union Budget. ^[2][4]### Significant Gains for States States across India are poised to benefit substantially from the GST rate rationalization. SBI Research predicts that most states will experience positive gains throughout the financial year. F^[1][2][3][4]or example, Maharashtra is projected to see a 6 percent increase in GST collections, while Karnataka could experience an even stronger improvement of 10.7 percent. ^[1][2][3][4]Overall, states will remain net gainers after the GST rationalization. F^[1][2][3][5]Y26 projections indicate that states are expected to receive at least ₹10 trillion in state GST. Add^[5]itionally, they will gain ₹4.1 trillion through tax devolution. This ^[5]means that for every ₹100 of GST collected, states will ultimately accrue nearly ₹70.5. This uniq^[5]ue revenue-sharing architecture of the GST system plays a crucial role in ensuring states' financial stability. ### Hist^[5]orical Data Supports Resilience The positive projections from SBI Research are firmly rooted in historical data. Previous adjustments to GST rates, such as those implemented in July 2018 and October 2019, consistently showed that revenue collections do not weaken in the long term after rationalization. Instead, ^[1][2][3][4]collections typically stabilize after a brief transition period and then accelerate, demonstrating the resilience of the tax system. The anal^[2][4]ysis acknowledges that a sharp reduction in tax rates can trigger a short-lived decline of around 3-4 percent month-on-month. This temp^[1][2][4]orary dip translates to roughly ₹5,000 crore monthly, or nearly ₹60,000 crore on an annual basis. However, the ^[1][2][4]report notes that GST receipts generally recover quickly, with consistent monthly increases of 5-6 percent. In past episo^[1][2][4]des, this dynamic has translated into additional revenues of nearly ₹1 trillion. This historical^[2][4][6][7] trend reinforces the expectation of robust collections in the upcoming financial year. ### Recent Col^[4]lection Trends and Future Outlook Recent data on GST collections further underscores the strength of the tax system. For the period from April to October in the current financial year (2025-26), GST inflows reached approximately ₹13.89 lakh crore. This marks a 9 pe^[1][2][4]rcent increase from ₹12.74 lakh crore collected during the same period last year. In October, gross ^[1][2][4]GST receipts rose by 4.6 percent, reaching approximately ₹1.95 lakh crore. This compares to abou^[2][4][6]t ₹1.87 lakh crore in the same month the previous year. All components of GST—C^[2][4][6]entral-GST, State-GST, and Integrated-GST—recorded year-on-year growth, although there was a slight dip in cess revenue. The central government's r^[2][4][6]evenue loss from the recent GST rate cuts is projected to be minimal, around ₹3,700 crore in FY26. This modest impact is expecte^[8]d to be cushioned by strong consumption and improved tax compliance. The reforms are viewed as str^[8]uctural, simplifying the framework, reducing compliance burdens, widening the tax base, and encouraging voluntary compliance. These factors collectively co^[8]ntribute to the positive outlook for India's GST revenue in the coming fiscal year.

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