States are projected to remain net beneficiaries of GST collections in FY26, even after the proposed rate rationalisation, with revenues estimated at Rs 10 lakh crore from State GST (SGST) and another Rs 4.1 lakh crore via tax devolution, according to an SBI Research report released on Tuesday.

The report highlights the distinctive revenue-sharing framework of GST. Half of the collections are shared with the states, while 41 per cent of the Centre’s share is devolved back to them.

“Effectively, states receive nearly Rs 70.5 out of every Rs 100 collected under GST — close to 70 per cent of total revenues,” it observed.

Even without factoring in the consumption boost expected from rate rationalisation, states stand to gain. At an effective GST rate of 9.5 per cent, the study estimates a revenue uptick of Rs 52,000 crore — equally split between the Centre and states.

Citing past instances of GST rate adjustments, in July 2018 and October 2019, SBI Research said rationalisation does not necessarily dent collections. “While a short-term dip of around 3–4 per cent month-on-month (roughly Rs 5,000 crore, or Rs 60,000 crore annually) can occur, revenues typically recover with sustained monthly growth of 5–6 per cent,” it said.

Since GST’s rollout in July 2017, states were assured a 14 per cent annual revenue growth for five years, backed by a compensation cess on luxury and sin goods. As per GST Council decisions, states received Rs 9.14 lakh crore in compensation during the transition period ending June 2022 — Rs 63,265 crore more than the projected amount based on the guaranteed 14 per cent increase.