Amidst challenges around slowing demand and GST rate cuts implemented from September 2025, many of the larger states have recorded a decline in GST collections this fiscal year. Analysis of data from the Comptroller and Auditor General of India shows that 9 out of 24 states and union territories, for which data is available, have witnessed a contraction in GST collections between April and November 2025 compared to the same period in FY25.
States which have recorded a decline include larger states such as Tamil Nadu (-2.3 per cent), Kerala (-4.1 per cent), Odisha (-7.4 per cent) and Madhya Pradesh (-2.7 per cent).
“This year has quietly revealed a deepening fault-line inside the GST system,” an tax expert said. While national GST has held up at about 6-7 per cent growth, he noted that nearly half the states have struggled to cross 5 per cent growth or have slipped into contraction because the revenue engine itself has changed.
According to him, FY26 growth has been driven largely by import IGST and settlements flowing to a handful of large consumption and logistics hubs, while net domestic GST has been weighed down by rising refunds and tighter input tax credit controls.
Many of the States have managed sluggish growth, below 5 per cent in GST collections. This category includes large consumption-oriented states such as Karnataka (4.9 per cent), Uttar Pradesh (4.1 per cent), and Telangana (3.4 per cent).
Only 10 states crossed the 5 per cent growth mark, highlighting how GST momentum has narrowed. Haryana led the growth chart with a 22.4 per cent growth, followed by Assam (20.7 per cent), Sikkim (15.9 per cent), Maharashtra (11.4 per cent) and Punjab (10.8 per cent).
In absolute terms, Maharashtra remained the largest contributor, adding ₹12,111 crore to GST collections during the period, despite slower growth than last year. Haryana (₹5,589 crore), Uttar Pradesh (₹4,189 crore), Gujarat (₹3,699 crore) and Karnataka (₹2,998 crore) followed.
Experts said that states with strong manufacturing, logistics activity, deeper formalisation and large IGST settlements have outperformed, while smaller and consumption-light states remain more exposed to refund volatility and compliance tightening.
For state finances, the April-November data offer early caution. With GST compensation no longer in place, fiscal outcomes are becoming more uneven, increasingly tracking real economic activity and compliance depth rather than broad-based GST buoyancy.
