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GST 2.0 Collections Diverge Sharply Across India’s Top States
India changed some GST tax rates in September 2025.
After the changes, different States collected tax at very different speeds.
Gujarat and Karnataka collected more GST than they did during the comparable period earlier.
Maharashtra, Uttar Pradesh and Tamil Nadu grew more slowly, close to the national average.
One expert said faster growth may show that people are buying more after the tax cuts.
Another said Karnataka and Tamil Nadu are better comparisons because their economies are similarly based on manufacturing and services.
He argued that differences in business sectors and welfare payments may affect how much consumption becomes taxable.
Other factors, such as tax compliance and the timing of tax settlements, may also matter.
Experts said more time is needed before drawing firm conclusions about the tax changes.
Gujarat and Karnataka recorded post-settlement GST growth of 28% and 23%, respectively, from April to August 2026.
Maharashtra, Uttar Pradesh and Tamil Nadu grew 18%, 17% and 16%, respectively, broadly matching the 16% national average.
In August alone, Gujarat, Karnataka and Uttar Pradesh led the major States, while Maharashtra and Tamil Nadu slowed to 13% and 7%.
Experts attributed differences to State economic profiles, tax bases, consumption patterns, sector performance and compliance efficiency.
Analysts cautioned that it is too early to blame GST rationalisation alone for weaker collections and said longer-term trends are needed.
- Who
- Gujarat, Karnataka, Maharashtra, Uttar Pradesh and Tamil Nadu, along with analysts Madan Sabnavis, Nithin Chandra and Shivam Mehta.
- What
- State-wise post-settlement GST collections showed widely different growth rates under the GST 2.0 regime.
- Where
- India, across its States and Union Territories, with specific comparisons among major States.
- When
- The comparison covers April-August 2026; GST rate cuts began in September 2025, and the report was published September 3, 2026.
- Why
- Differences may reflect economic structures, tax bases, consumption, sector performance, compliance efficiency and the timing of IGST settlements.
Rate Cuts and Consumption Effects
Structural and Timing Factors
What explains faster State growth?
Rate Cuts and Consumption Effects
Madan Sabnavis said above-average collection growth may indicate that GST rate cuts helped increase physical consumption in some States.
Structural and Timing Factors
Nithin Chandra and Shivam Mehta pointed to economic composition, sector-specific performance, compliance trends and IGST settlement timing as important influences.
Why Tamil Nadu trails Karnataka
Rate Cuts and Consumption Effects
The slower growth in Tamil Nadu may suggest that consumption there has not increased as strongly following the rate cuts.
Structural and Timing Factors
Nithin Chandra said Tamil Nadu’s manufacturing sectors were affected by GST 2.0, while its welfare transfers in kind increase measured household consumption without generating tax; he also said Karnataka converts more of its consumption base into SGST.
How firm are the conclusions?
Rate Cuts and Consumption Effects
The State-level divergence offers an early indication of how GST rationalisation has affected consumption and collections.
Structural and Timing Factors
Shivam Mehta said the trend should be observed over a longer period before GST rationalisation is identified as the sole cause of weaker collections.
Key facts
- Fastest April-August growth
- Gujarat: 28%; Karnataka: 23%.
- Other major States
- Maharashtra: 18%; Uttar Pradesh: 17%; Tamil Nadu: 16%.
- National average
- Post-settlement GST collections grew 16% from April to August 2026.
- August leaders
- Gujarat grew 28%, Karnataka 19% and Uttar Pradesh 17%.
- August slower performers
- Maharashtra grew 13% and Tamil Nadu 7%.
- GST 2.0 rate changes
- Major GST rate cuts took effect in September 2025 across items including essentials, electronics, vehicles and construction materials.
- Analyst caution
- Shivam Mehta said it would be premature to attribute weaker collections solely to GST rationalisation.
Quotes
Nithin Chandra
Senior Partner at consulting firm Kearney
“In comparison, Tamil Nadu’s core manufacturing sectors such as textile, auto components, engineering goods, and others have all had an impact of GST 2.0 rate cuts.”
thehindubusinessline.com
“Karnataka’s vast domestic B2B IT-services base generates SGST at 18 per cent and has a limited impact of GST 2.0.”
thehindubusinessline.com
Sources
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