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GST Revenue Surprise: Why FY26 Collections Will Beat Budget Estimates

SBI Research has some encouraging news about GST collections for the upcoming financial year. The report projects that GST revenue in FY26 will actually exceed budget estimates despite recent tax rationalization measures. Most states are expected to be net gainers from the new two-tier tax structure, with Karnataka seeing the highest gains at 10.7%. Historical evidence shows that while rate changes cause temporary dips, revenues typically rebound with sustained growth of 5-6% per month.

Key Points: SBI Research Projects GST Revenue to Exceed FY26 Budget

  • GST collections projected to exceed budget estimates despite tax rationalization
  • Most states experience positive gains from the new two-tier tax structure
  • Maharashtra gains 6% while Karnataka sees 10.7% increase post-rationalization
  • Historical data shows temporary dip followed by sustained 5-6% monthly growth
  • GST collections rose 9% to ₹13.89 lakh crore in April-October 2025-26
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GST revenue in FY26 to exceed budget estimates, says SBI Research

SBI Research forecasts GST collections will surpass budget estimates in FY26 despite tax rationalization, with most states becoming net gainers from the new rate structure.

"We project GST revenue for FY26 will still be higher than budgeted GST collections - SBI Research Report"

New Delhi, November 2

The Goods and Services (GST) revenue for the Financial Year 2026 (FY26) will still be higher than budgeted collections, according to SBI Research.

The report projects that even after accounting for similar gains and losses across states following tax rationalisation measures, Goods and Services Tax (GST) receipts in FY26 are likely to surpass the government's budget estimates.

"We project GST revenue for FY26 will still be higher than budgeted GST collections," the report said.

The projections are based on the growth rate assumptions released by the GST Council, SBI Research noted.

The report added that most of the states experience positive gains for the entire fiscal post rationalisation.

The GST rate rationalisation, which was introduced in September 2025 provides two-tier structure of 5 per cent and 18 per cent, along with a 0 per cent slab (exempt) and a new 40 per cent demerit rate for luxury and sin goods.

In its observation, the report noted that Maharashtra is projected to gain by 6 per cent while Karnataka will gain by 10.7 per cent

"Thus, overall states will remain net gainers post GST rationalisation," the report added.

Evidence from earlier rounds of GST rate changes, such as those in July 2018 and October 2019, suggests that rationalisation does not necessarily weaken revenue collections.

Instead, the evidence points to a temporary adjustment phase followed by stronger inflows.

The report added that while an immediate reduction in rates can cause a short-term dip of around 3-4 per cent month-on-month (roughly Rs 5,000 crore, or an annualized Rs 60,000 crore), revenues typically rebound with sustained growth of 5-6 per cent per month.

"In past episodes, this dynamics is translated into additional revenues of nearly Rs 1 trillion," the report added.

GST collections in October, in gross terms, rose 4.6 per cent to about 1.95 lakh crore compared to about 1.87 lakh crore in the same month last year, according to official data released on November 1.

In the month of October, collections of Central-GST, State-GST, and Integrated-GST rose year-on-year, while cess collections dipped year-on-year, data showed.

So far in 2025-26 - April-October - the GST collections rose 9.0 per cent to about Rs 13.89 lakh crore, as against Rs 12.74 lakh crore in the same period last fiscal.

- ANI

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Reader Comments

R
Rohit P
Good to see states like Karnataka getting 10.7% gains. Hope this translates to better infrastructure and development projects in our state. The initial GST implementation was chaotic, but it's finally stabilizing.
A
Arjun K
While the numbers look positive, I'm concerned about the 40% demerit rate on luxury goods. This feels like double taxation for middle-class consumers who occasionally buy premium products. The government should reconsider this slab.
S
Sarah B
The data-driven approach by SBI Research is impressive. The projection of additional revenues of nearly Rs 1 trillion based on past trends gives confidence in our tax system's maturity. Well done! 👍
V
Vikram M
April-October collections up 9% is remarkable! This shows the Indian economy's resilience. Hope the government uses this surplus for education and healthcare initiatives. Jai Hind!
M
Michael C
The temporary dip of 3-4% mentioned in the article is a valid concern for businesses. While the long-term outlook is positive, small enterprises need support during these adjustment phases. The government should plan for this.

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