Telangana has emerged as one of the biggest beneficiaries of the goods and services tax (GST) rate rationalisation, recording a sharp turnaround in collections and ranking second in year-on-year growth across the country, shows the latest Ecowrap report.
While the state had initially projected a 7% loss in GST income after the restructuring of rates, it instead registered a 10% gain, signalling strong tax compliance and business recovery. The report projects that Telangana will record an annual GST growth rate of 8–9% in FY26 compared to FY25. Karnataka is expected to lead with 10% growth, while Chhattisgarh is likely to match Telangana’s performance.
Based on domestic GST collection estimates, Echowrap notes that if states continue on the same trajectory seen in October 2025, overall GST revenues for FY26 could surpass budgeted projections. Data from the GST Council indicates that most states have shown positive momentum after rationalisation, defying earlier fears of a slump in revenue.
The report highlights how several states that anticipated major losses have instead posted healthy gains. Karnataka, which had estimated a monthly fall of Rs 7,083 crore, saw around 10% year-on-year growth. Punjab registered a 4% increase, while Telangana notched up a 10% gain, collecting Rs 5,726 crore in Oct 2025 compared to Rs 5,211 crore a year earlier. Telangana, which had projected a monthly loss of Rs 583 crore, in fact recorded a gain of Rs 783 crore.
Among the laggards, West Bengal saw a marginal 1% dip, and Kerala’s GST revenue slipped by 2%.
“Evidence from previous GST rate changes, such as those in July 2018 and Oct 2019, suggests that rationalisation does not weaken revenue collections. After a brief adjustment phase, revenues rebound with monthly growth of 5-6%,” the report said.
While the immediate rate cuts may have caused a short-term dip of 3-4% month-on-month (about Rs 5,000 crore), Ecowrap concludes that rationalisation has strengthened the overall GST base, setting the stage for sustained growth in future.
Source #TOI
