GST Collection in India (2017–2026): An Empirical Study of Fiscal Federalism and Revenue Performance

Abstract

The introduction of Goods and Services Tax (GST) in India in 2017 brought significant development across the financial system of the country. It is a crucial accountability for all production and service businesses. During the pre-GST period, there had been significant tax non-payers. Post-GST, all legal business accounting was included. It was continuously noted that if a business failed to pay GST, that business was automatically made to close its economic activity. This represents structural prosperity for the country as well as improved tax collection. According to the GST Council of India, Rs. 8,76,770 crore was collected in GST during 2017–2018. There was a significant increase in 2024–2025, reaching Rs. 16,75,697 crore. This shows that there has been an increase in the registration of businesses and taxpayers in the country. The study compares GST collections across the states. To understand tax bureaucracy, the study focuses on the GST-to-GDP ratio. It also adopts regression analysis with variables: GST collections as the dependent variable, with GDP, consumption, imports/exports, inflation, and compliance indicators as regressors. Overall, the study examines the impact of GST in India from 2017 to 2026. Statistical findings reveal a near-perfect positive correlation between GST collection and GDP growth, with private consumption acting as a primary revenue driver. Furthermore, the analysis identifies regional disparities, noting that while industrial states maintain stable growth, northeastern states have seen the most rapid percentage increases. Ultimately, the source positions GST as a critical pillar of India’s economic development that requires continued policy refinement to support smaller businesses and administrative efficiency. However, limited empirical studies have examined GST collections in India through the lens of fiscal federalism.