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Karnataka Leads Tax Revenue Growth, Gujarat Tops Capex
4 Jan
Summary
- Karnataka leads in tax revenue growth, followed by Maharashtra and Uttar Pradesh.
- Gujarat leads in capital expenditure growth, with Maharashtra and Karnataka also rising.
- SGST collection was affected by recent post-GST rate rationalization in major states.
During the April-November period of Fiscal Year 2025-26, Karnataka demonstrated the highest growth rate in state tax revenue, excluding union taxes. Maharashtra and Uttar Pradesh followed closely in this metric. Concurrently, Gujarat led the nation in capital expenditure increases, with Maharashtra and Karnataka also recording significant growth in their spending on infrastructure development.
The positive tax revenue growth in states like Karnataka, Maharashtra, and Uttar Pradesh was somewhat tempered by a slowdown in State Goods and Services Tax (SGST) collections. This deceleration is attributed to the post-GST rate rationalization implemented in September 2025, a trend observed across most major states. However, revenue from other sources, such as State Excise duty, showed improvement.
Capital expenditure trends presented a mixed picture, with Gujarat, Karnataka, and Maharashtra actively expanding their capex. This aligns with central government initiatives to boost physical infrastructure. Despite these investments, states' fiscal deficits are not expected to be significantly impacted, with most remaining within manageable levels relative to their budget estimates for the period.
