In a strongly worded report titled “THE LOSS THAT NEVER WAS!”, the bank’s research team states that the “mind-boggling figures of revenue losses being touted post GST rationalization have been trumped by today’s GST data release for October,” adding that evidence “suggests that rationalization does not necessarily weaken revenue collections… Instead, the evidence points to a temporary adjustment phase followed by stronger inflows as happened in 2018 and 2019.”
The latest gross GST collections for October 2025 — which reflect returns filed for September, including nine post-rationalisation days — rose 4.6% year-on-year to ₹1.96 lakh crore, effectively defying predictions of a steep downward shock.
Notably, while domestic consumption-linked revenue grew 2% YoY, GST import revenue surged 12.8% YoY, signalling robust demand for goods and inputs. “Defying wild speculations of a great fall… Gross GST collections for Oct’25 increased by 4.6% to Rs 1.96 lakh crore,” the report notes in its executive summary.
Record high e-way bills underscore demand strength
One of the clearest indicators of sustained economic momentum is the record 13.2 crore e-way bills generated in September 2025 — the highest since GST rollout. SBI Research writes that this growth is “an insignia of enhanced ease of business processes,” contributing to “total refund for Oct 25…registering a YoY growth of 39.6%.”
Predicted state losses fail to materialise — many actually gained
Multiple research houses and policy commentators had forecast deep state-level losses post rationalisation, estimating annual losses up to ₹10 lakh crore.
A slide in the report lists the estimated short-term revenue loss projections:
Agency Estimated Loss (₹ crore)
DFC First Bank Research - 1,80,000
Axis Bank Research - 1,80,000
SBI Research - 60,000
Surjit Bhalla & Rajesh Shukla (Independent Estimates) - 10,00,000
Finance Ministry, GoI - 48,000
Emkay Global Research - 1,20,000
SBI says these fears were overblown
“Interestingly, the strong momentum of GST collections belies not only the near absurd fear of large falls being circulated, it refutes the apprehension expressed by states about a perceived decline in GST revenue post rationalization,” SBI writes.
Many states that were projected to lose revenue actually saw gains:
State Estimated Monthly Loss (₹ cr) pre-rationalisation Actual Oct gain/loss %
Karnataka –7,083 +10%
Punjab –750 +4%
Telangana –3,683 +10%
West Bengal –1,667 –1% (marginal)
Kerala –2,083 –2%
“However, the estimated declines have not materialized as Karnataka actually gained 10% in Oct-25 compared to Oct-24. Similarly, Punjab has gained around 4%, while Telangana gained 10%.”
The decline seen in West Bengal and Kerala is described as marginal and temporary.
State-wise performance: The big picture
According to GSTN data summarised in the report:
Top growth-performing states (Oct-25 YoY %):
Assam: +34%
Nagaland: +46%
Arunachal Pradesh: +44%
Bihar: +11%
Jharkhand: +14%
Large states showing robust demand:
Maharashtra: ₹30,630 cr → ₹31,092 cr (+2%)
Karnataka: strong rebound and unexpected gain
Gujarat: steady collections at ₹11,407 cr → ₹12,153 cr (+7%)
States with moderate decline:
Tamil Nadu: –2%
Rajasthan: –3%
Kerala: –2%
A notable gap remains in Delhi, which saw –5% YoY, attributed by analysts to a structural shift in consumption and compliance tightening.
Why loss estimates were so wrong
SBI points to three fundamental blind spots in earlier projections:
1. Underestimation of GST buoyancy
Historical data has shown that after rate cuts, compliance improves and collections strengthen.
“Evidence from earlier rounds of GST rate changes… indicates that rationalisation should be seen less as a short-lived stimulus to demand and more as a structural measure that… widens the tax base.”
2. Focus on headline rate changes, ignoring input credit chain efficiency
Rationalisation simplifies classification, reduces disputes, and stabilises tax planning.
3. Better systemic compliance enforcement
Record e-way bills, AI-assisted fraud detection and higher voluntary compliance are raising the effective tax yield.
Net revenue efficiency improves substantially
Despite a sharp increase in refunds — ₹26,934 crore in October, up 39.6% YoY — net revenue still stood at ₹1.69 lakh crore.
SBI writes: “Total refund increased from Rs 1.3 lakh crore in FY21 to Rs 2.5 lakh crore in FY25,” yet overall revenues remain buoyant and rising.
The implication:
Compliance is stronger and leakage is lower than feared.
A turning point for GST reform
The report argues that policymakers should feel encouraged to continue rate simplification.
“Rationalisation should be seen as a step towards long-term revenue buoyancy and greater efficiency in the economy.”
This is consistent with Finance Minister Nirmala Sitharaman’s statements that GST reforms must “feel different to the taxpayer” and significantly ease business operations.
FY26 outlook: States to be net gainers
On a very rudimentary assumption that Oct-25 post-rationalisation patterns persist, SBI Research projects:
State FY26 GST Revenue Growth Projection
Karnataka +10.7%
Maharashtra +6%
Gujarat +5.6%
Tamil Nadu +5.3%
Uttar Pradesh +4.0%
Bihar +7.1%
Telangana +3.6%
“Thus, overall states will remain net gainers post GST rationalization,” SBI concludes.
Industry & policy implications
This reversal of narrative has three crucial outcomes:
- States have more fiscal comfort: the Centre may face fewer resistance points in future GST rate restructuring.
- Business confidence improves: predictability in taxation aids investment decisions.
- Better argument for trimming the 28% bracket: a cleaner rate slab structure now looks more achievable.
Markets see signal of growth durability
Tax analysts say the data reinforces India’s domestic demand resilience. A GST buoyancy near 1.4x of GDP growth suggests tax reforms are strengthening, not weakening, the exchequer.
A senior economist responding to the report commented that it “changes the tone of the revenue debate” around GST.
The big takeaway
After years of political and administrative debate, GST rationalisation — often seen as a risky move — now appears to be fiscally favourable.
SBI’s conclusion is unambiguous, “The loss that never was.”
Or as a senior tax partners put it, “The reforms did not break GST; they made it work better.”
The SBI Research report provides the first grounded indication that India may finally be transitioning to the next generation of GST — one that grows with the economy, rewards compliance, and reduces structural inefficiencies.
With data proving earlier forecasts wrong, the big question shifts from “Will revenues fall?” to “How aggressively can we simplify next?”
