Impact of Goods and Services Tax on State Tax Revenue Performance in India: Evidence from Major Indian States

This paper examines changes in state tax revenue performance after the implementation of the Goods and Services Tax (GST) across 18 major Indian states. Using secondary data from the GST portal and the Reserve Bank of India’s Handbook of Statistics on Indian States, the study compares the pre-GST period, 2012-13 to 2016-17, with the post-GST period, 2018-19 to 2023-24. The transition year 2017-18 is excluded from the analysis because GST was implemented during that financial year. The study uses three indicators to assess state revenue performance: tax-to-NSDP ratio, compound annual growth rate of tax revenue, and tax buoyancy. It also compares post-GST revenue performance with and without GST compensation in order to understand the role of central support in stabilising state revenues during the transition. The findings suggest that the post-GST revenue experience has been mixed across states. Some states, such as Maharashtra, Odisha and Madhya Pradesh, show relatively stronger revenue performance in the post-GST period, while others display weaker or more volatile outcomes. GST compensation appears to have played an important stabilising role for states that experienced a decline in tax-to-NSDP ratios after GST implementation. However, the post-GST period was also affected by the COVID-19 shock, which created abnormal movements in revenue growth and tax buoyancy. Therefore, the results are interpreted as descriptive evidence of changing state-level revenue patterns rather than as strict causal estimates of GST’s independent effect. The study highlights the need for state-specific fiscal support, improved