States’ aggregate revenue from taxes subsumed under GST fell to 5.5% of GDP in 2023–24, down from 6.5% in 2015–16.
North-Eastern states improved their tax-to-GSDP ratios, while major states such as Punjab and Karnataka saw sharper declines.
In 2025–26, SGST accounted for 44% of states’ own tax revenue, followed by Sales Tax, State Excise, and Stamp Duty & Registration Fees.
The aggregate revenue generated by states from taxes subsumed under the GST has declined for most states, even though North-Eastern states have shown improvement in their subsumed tax-to-GSDP ratios compared to the pre-GST regime, a report by PRS Legislative Research showed.
According to the report, aggregate revenue for states from subsumed taxes dropped to 5.5% of GDP in 2023–24, down from 6.5% of GDP in 2015–16. The Goods and Services Tax (GST), implemented in 2017 as a major tax reform, subsumed a range of central and state-level taxes, including VAT, Central Sales Tax, Excise Duty, and Entry Tax.
The report highlighted that the average SGST as a percentage of GDP over the past seven years has remained below the average of subsumed taxes during the four full years before the implementation of GST. States were guaranteed a 14% annual growth in SGST revenue during the first five years, and those that fell short of this growth were compensated through revenue from the GST compensation cess until 2022.
“In the four years before 2015–16, states received an average of 2.8% of GDP from taxes that were later subsumed under GST,” The Economic Times reported. Meanwhile, revenue dropped to 2.7% in the first full year of GST and further declined to 2.3% during the pandemic period of 2020–21. However, it recovered to 2.8% in 2024–25.
The report noted significant variation across states. Some North-Eastern states — including Meghalaya, Manipur, Mizoram, Nagaland, and Sikkim — showed improvement in their subsumed tax-to-GSDP ratios compared to the pre-GST regime. The 15th Finance Commission observed that this improvement is likely due to the destination-based principle of taxation under GST.
In contrast, states such as Punjab, Chhattisgarh, Karnataka, Madhya Pradesh, and Odisha witnessed a steeper decline in their revenue from subsumed taxes as a percentage of GSDP.
In 2025–26, 44% of the states’ own tax revenue came from State Goods and Services Tax, while 20% came from Sales Tax, 14% from State Excise, and around 12% from Stamp Duty and Registration Fees.
