GST, stamp duty drive state revenues: Own tax collections rise 14% in first four months of FY27

States’ own-tax revenue rose 13.7% year-on-year to ₹7.93 lakh crore during April-July FY27, led by strong GST, stamp duty, sales tax and excise collections. According to Axis Bank Research, the increase in state revenues has helped keep finances in check despite a decline in central tax devolution and grants.

State own-tax revenue grows 14%

During the first four months of FY27, own-tax revenue of the 19 states tracked in the report increased 13.7% year-on-year to ₹7.93 lakh crore, compared with ₹6.98 lakh crore in the corresponding period of FY26. The increase was supported by higher collections from GST, stamp and registration duties, sales tax and state excise.

Overall, states’ revenue receipts rose 7.6% YoY to ₹12.30 lakh crore during April-July FY27, from ₹11.43 lakh crore a year earlier. Total tax revenue increased 8.2% to ₹10.74 lakh crore.

Axis Bank Research said revenue growth improved by around 2 percentage points compared with last year, with both tax and non-tax revenue contributing to the increase.

GST collections rise 12.7%

GST remained one of the key contributors to the improvement in state revenues. GST collections rose 12.7% YoY to ₹3.67 lakh crore in April-July FY27, compared with ₹3.26 lakh crore in the year-ago period.

The report attributed the strength in own-tax collections to GST, higher stamp and registration duties amid increased real-estate values, and sales tax, with oil volumes also supporting the latter.

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Stamp duty collections jump 16.9%

Stamp and registration duties recorded even faster growth, rising 16.9% YoY to ₹98,000 crore during April-July FY27 from ₹83,800 crore a year earlier.

The increase was part of the broader rise in states’ own-tax collections and was linked by Axis Bank Research to higher real-estate values. Sales tax also increased 11.4% YoY to ₹1.46 lakh crore, from ₹1.31 lakh crore during the corresponding period.

State excise revenue rises 13.5%

State excise also provided a significant boost to own-tax collections. Revenue from state excise increased 13.5% YoY to ₹1.07 lakh crore in the first four months of FY27, compared with ₹94,000 crore in April-July FY26.

Other taxes and duties recorded an even sharper 21.1% YoY growth, reaching ₹68,900 crore from ₹56,900 crore during the corresponding period.

Non-tax revenue rises, but Centre transfers fall

States’ non-tax revenue grew 25% YoY to ₹1.09 lakh crore, compared with ₹87,300 crore a year earlier. However, this improvement came alongside weaker central transfers.

The states’ share of Union taxes declined 4.7% YoY to ₹2.80 lakh crore, while grants-in-aid fell 26.8% to ₹46,700 crore. Axis Bank Research attributed the decline in central transfers to the double devolution of June 2025 and lower grants under the 16th Finance Commission.

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State spending growth slows

The stronger revenue performance has come alongside moderation in overall state spending. Spending by the 19 states grew 6% YoY during April-July FY27, compared with 11% in FY26. Revenue expenditure grew 5%, while capital expenditure remained strong at 15% YoY.

The report also highlighted strong capital spending in the economic sector, where expenditure grew 22%. Loans under the SASCI programme increased 75% YoY, supporting the overall capex momentum.

Fiscal deficit remains under control

The favourable revenue-spending combination has kept states’ April-July fiscal deficit at 21.5% of their FY27 budget estimates, although this was around 2.5 percentage points higher than the five-year median.

States have budgeted a fiscal deficit ratio of 3.1% for FY27, and Axis Bank Research said current trends make this target likely to be met. State gross market borrowings in the first half of FY27 are also expected to be 6% higher than FY26, equivalent to around 86% of the indicative calendar.

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