Maharashtra has emerged as the largest contributor to states’ tax revenue in recent years since the implementation of the Goods and Services Tax (GST), supported by its high domestic consumption and large services sector, according to a report by India Ratings and Research (Ind-Ra).The rating agency said GST has strengthened state governments’ tax collections and improved tax buoyancy since its implementation on July 1, 2017.The reform replaced 17 different taxes and 13 cesses, bringing multiple central and state taxation rates and structures under a unified system.Ind-Ra’s analysis of 26 states showed that tax buoyancy improved significantly after GST implementation.“The tax buoyancy of 26 states studied increased to 2.9 during FY18-FY26, i.e., post GST implementation, compared to 0.6 during FY14-FY17,” Ind-Ra Economist and Director Megha Arora said.Manipur, Nagaland, Goa, Maharashtra and Sikkim recorded the highest tax buoyancy after GST was introduced. Before GST, Meghalaya, Bihar, Nagaland, Chhattisgarh and Manipur were the leading states on this measure.The agency said the improvement was driven by changes in the indirect tax system, including the move towards a destination-based consumption tax, bringing services into the GST framework and reducing tax leakages.“One of the key reasons for this is the structural change in indirect taxation to a destination-based consumption tax from origin-based production tax, inclusion of services post GST, and plugging tax leakages,” Ind-Ra said.SGST collections rise despite slower GSDP growthState governments’ tax revenue collection grew at a faster pace in the post-GST period compared with the years before the tax reform, according to Ind-Ra.During FY13-FY17, state tax revenue increased 6.8% to Rs 3.7 lakh crore, while Gross State Domestic Product (GSDP) rose 11.6%.The revenue figures for this period included taxes and cesses that were later subsumed under GST.The report analysed 26 states and Union Territories where comparable data was available from FY13-FY17. These states account for nearly 80% of SGST collections, excluding Integrated Goods and Services Tax (IGST).Between FY18 and FY26, state governments’ tax revenue through SGST increased 9% to Rs 12.9 lakh crore. This came despite GSDP growth slowing to 10.4%, with GSDP reaching Rs 315.2 lakh crore.Ind-Ra said technology adoption, analytics-based monitoring, a simpler taxation system and a wider taxpayer base supported the rise in SGST collections.“This higher SGST growth has been due to the simplification of taxation system, incorporation of technology and analytics to ensure tax compliance, and expansion in taxpayers’ base that increased to 1.65 crore in May 2026 from 67 lakh in 2017, underlining formalisation of the Indian economy,” Ind-Ra said.The agency added that higher tax revenue reflected increased consumption along with improved monitoring and compliance.While the contribution pattern of states changed after GST implementation, Maharashtra and Karnataka continued to remain the top two contributors to states’ tax revenue.Maharashtra’s share increased to 20.4% during FY18-FY26 from 17.6% during FY13-FY17.“Though Maharashtra always remained the frontrunner, its share in states tax revenue increased to 20.4% during FY18-FY26 from 17.6% during FY13-FY17, given the high domestic consumption and presence of a large services sector,” Arora said.