States to Gain from GST Rate Rationalisation: SBI Report

States are expected to emerge as “net gainers” from the proposed goods and services tax (GST) rate rationalisation, and their revenue is projected to exceed Rs 14.10 lakh crore in this financial year, including devolution, according to an SBI Research report.

The report said that the GST rate rationalisation exercise may not necessarily mean revenue loss for states as it is evident from the past exercise, although there may be an immediate dip of 3-4% in revenue collection.

“Our projections for FY26 indicate that states remain net gainers even after post-GST rate rationalisation,” the reports said, adding that states may mop up Rs 10 lakh crore in state GST and Rs 4.1 lakh crore through devolution.

Eight opposition-ruled states expressed concerns, estimating potential revenue loss of Rs 1.5-2 lakh crore and demanding revenue protection mechanisms.

“Out of every Rs 100 of GST collected, states ultimately accrue nearly Rs 70.5 or approximately 70% of total GST revenues,” the report said.

SBI Research emphasised that the benefits will go beyond revenue generation as these structural measures will simplify the tax system, reduce compliance burden and widen the tax base, leading to long-term revenue buoyancy and greater economic efficiency.

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