SBI Research has projected that Goods and Services Tax (GST) revenue for FY26 will exceed the government’s budget estimates, even after factoring in the impact of tax rationalisation across states.
In a major reform in GST, the Indian government has rationalised the slab rates by clubbing the earlier four tax slabs into 2 – 5 per cent and 18 per cent, along with an additional and special 40 per cent slab for sin goods. The new slabs became effective from September 22, the day coincided with the launch of GST Bachat Utasav, marking a major step to decrease indirect tax burden and to boost consumption across India.
The report noted that GST collections are likely to remain strong, supported by the growth rate assumptions outlined by the GST Council.
In a sharply worded report titled “THE LOSS THAT NEVER WAS!”, SBI Research dismissed concerns of a revenue shortfall after GST rate rationalisation, saying the “exaggerated estimates of revenue loss” have been disproved by October’s strong GST data. The report added that historical trends show rationalisation doesn’t weaken collections, but rather leads to a brief adjustment period followed by stronger inflows, as seen in 2018 and 2019.
It further added that most states are expected to witness positive revenue gains throughout the fiscal year following the rationalisation exercise.
Most states are expected to benefit from the tax rationalisation throughout the fiscal year, the report said. Maharashtra’s revenue is projected to rise by about 6%, while Karnataka could see a stronger gain of nearly 10.7%.
(With ANI Inputs)
