KOCHI: When the GST Council cut tax rates last September, Keralam, a consumption-oriented state, braced for a hit to its tax revenues. Six months into 2026-27, however, the numbers tell a different story.
Between April and September 2026, Keralam’s GST revenue after IGST settlement — the amount actually accruing to the state — rose 18.8% to Rs 19,583 crore, from Rs 16,482 crore in the corresponding period last year. Across all states, the increase was 16%, with the combined collections touching Rs 5.79 lakh crore.
Keralam’s own SGST collections grew 13.8% to Rs 8,970 crore, compared with a national growth of 5.8%.
Several large states performed worse. Own SGST collections fell 2% in Tamil Nadu, 1% in West Bengal and 4% in Delhi.
September 2026, too, recorded steady growth. Keralam’s post-settlement GST revenue rose 9% to Rs 3,451 crore, while own SGST collections increased 8% to Rs 1,481 crore.
When the revised GST structure was implemented in September 2025, the then LDF government had expressed concern over its impact on Keralam’s revenues. It had estimated that the two-rate structure could result in an annual revenue loss of Rs 8,000 crore to Rs 10,000 crore for the state.
Dr Kiran Kumar Kakarlapudi, assistant professor at GIFT and economic advisor to the vice-chairman of the State Planning Board, said the first half of 2026-27 offers the clearest comparison of the impact of the revised rates. The April-September period fell entirely under the new rates, while the corresponding period of 2025 was entirely under the old structure.
According to his analysis, Keralam ranks fifth among the 18 general-category states, up from 11th a year earlier. Its own-SGST growth is the second fastest in the group.
“Keralam slowed less than most states in 2025-26. Its growth eased from 6.2% to 3.1%, while the national rate nearly halved from 11.4% to 5.7%. In the second half of 2025-26, after the rate cut, Keralam’s growth picked up to 4% from 2.2% in the first half, even as national growth eased from 6.2% to 5.2%,” he said.
Kiran said the improvement in Keralam’s GST growth could partly be linked to increased purchases of motor vehicles and consumer durables.
“This corresponds to high growth in motor vehicle tax in Keralam compared with other states. Under the revised rate structure, luxury vehicles are taxed at 40%, which now accrues to the state governments,” he said.
GST 2.0 also increased the tax rate on lottery tickets, an important source of revenue for Keralam.
“Lottery tickets moved from 28% to 40%. The state chose to hold ticket prices and absorb the increase through smaller prizes and commissions. If sales held, the higher rate adds roughly Rs 300 crore in SGST over a half-year, perhaps a quarter of Keralam’s gain. The rest fits a volume response to lower rates in a state that consumes far more than it produces,” he said. The figures are provisional, and the full-year 2026-27 data will show whether Keralam can sustain its improved position.