While Maharashtra and Uttar Pradesh are trying to claw back their GST collections, Tamil Nadu is quite badly hit since last November.

GST 2.0, or rationalisations in GST rates and slabs was implemented on September 22, 2025. While there was a spurt in GST growth rate in August, collections have decelerated across States since November.

But a businessline analysis of the year-on-year growth rates in SGST collections between April and February FY26 shows that Karnataka and Gujarat have recovered from the hit delivered by the transition quickly. While Maharashtra and Uttar Pradesh are trying to claw back their GST collections, Tamil Nadu is quite badly hit since last November.

Pritam Mahure, founder CA Pritam Mahure and Associates thinks that the variation cannot be pinned to specific reasons. “GST is a destination-based consumption tax. In India, consumption differs from State to State and months to months (due to either State-specific festivals or agriculture earnings). Even elections in States like Maharashtra leads to increase in consumption (either due to Ladli Bahin Yojana or spends on party campaigns by political parties),” he says.

Diverging momentum

Tamil Nadu has seen repeated slowdowns in SGST collections since last September. Growth weakened to low single digit of 4 per cent in and October, turned negative in November and remained flat in December. Although it recovered slightly in January, February again saw fall in collections. Uttar Pradesh also faced weak months, including negative growth in October and November, but appears to be stabilising.

Following the GST 2.0 rate rationalisations, most products like cement, small-medium cars, FMCG products, saw their GST rates come down from 28 per cent to 18 per cent. For some other items it has come down to 5 per cent while for others like large cars and aerated drinks it is 40 per cent now. The consumption of these goods is equally high is Tamil Nadu, when compared to Karnataka or Maharashtra.

Contrary to Tamil Nadu and Uttar Pradesh however, Karnataka maintained consistent expansion. Although there was a slowdown in growth of SGST collections in November and December, where collections grew by only 5 per cent y-o-y, it recovered to double digit growth in February.

Economic structure

“Karnataka’s services-led economic structure, particularly IT and high-value business services, produces relatively stable and consumption linked tax flows. Services generally have lower input credit intensity and stronger tax efficiency per unit of output”, said Manoj Mishra, partner at Grant Thornton Bharat.

Following GST 2.0 implementation, Maharashtra too like Karnataka saw a slowdown in growth of GST collections in November and December before recovering somewhat in January and February.

In the April-February period of FY26, Karnataka emerged as the strongest performer with 11 per cent cumulative growth in SGST collections. Maharashtra and Gujarat followed at 8 per cent each, while Uttar Pradesh trailed at only 2 per cent growth in cumulative collections y-o-y. The growth in Tamil Nadu was a low 4 per cent in this period too, hurt by the de-growth in the last four months.

Published on March 3, 2026