Eight years have passed since the implementation of the Goods and Services Tax (GST), and a report recently presented by SBI Research has revealed that nearly 50 percent of the total active GST taxpayers in India are concentrated in just five states. This indicates a significant level of tax registration in a few states, highlighting the opportunity for improvement in other states. It states, "About 50 percent of the total active GST taxpayers were from the top 5 states."
The five states leading in GST taxpayer registration are Uttar Pradesh, Maharashtra, Gujarat, Tamil Nadu, and Karnataka. Among these, Uttar Pradesh tops the list, accounting for 13.2 percent of all active GST taxpayers in the country, followed by Maharashtra at 12.1 percent, Gujarat at 8.4 percent, Tamil Nadu at 7.7 percent, and Karnataka at 6.9 percent. While these states dominate in terms of taxpayer numbers, the report also notes an important observation, stating that some economically strong states are underperforming in GST participation compared to their share in the total Gross State Domestic Product (GSDP).
This includes Telangana, Tamil Nadu, Kerala, Andhra Pradesh, and Karnataka, whose share of active GST taxpayers is less than their contribution to the national GSDP. This indicates a gap in formalization and shows untapped potential for GST expansion in these states. In contrast, states like Uttar Pradesh, Bihar, and Gujarat show the opposite trend. Their share in total GST registrations is higher than their share in GSDP, indicating greater formalization and improved tax compliance. For example, despite contributing only 2.8 percent to the national GSDP, Bihar accounts for 4.3 percent of total GST taxpayers.
The report also highlights that states like Uttarakhand, Chhattisgarh, Jammu and Kashmir, and Himachal Pradesh have a very small share in the total number of GST taxpayers. Each state's share is 1.4 percent or less. Eight years have passed since the implementation of GST, but the data shows that while there has been progress in expanding the tax base, especially in wealthy and more industrialized states, a significant opportunity still remains. This insight can help guide future strategic efforts to increase formalization across all sectors and boost GST compliance.