While India celebrates eight years of the Goods and Services Tax (GST), a recent study by SBI Research found that almost 50% of all active GST taxpayers are located in only five states.
This concentration reflects uneven tax registration distribution across the nation and highlights opportunities for more widespread formalisation in most regions.
As per the report, "Top 5 states accounted for approx. 50 per cent of total Active GST Tax Payers," where the top five are Uttar Pradesh, Maharashtra, Gujarat, Tamil Nadu, and Karnataka.
Uttar Pradesh takes the lead with 13.2% of India's total active GST taxpayer base. It is followed by Maharashtra at 12.1%, Gujarat at 8.4%, Tamil Nadu at 7.7%, and Karnataka at 6.9%.
Although these states lead in registration figures, the report highlights a significant gap between economic development and GST enrollment. Economically developed, high-GSDP-contributing states such as Telangana, Tamil Nadu, Kerala, Andhra Pradesh, and Karnataka have a smaller proportion of active GST taxpayers than the proportion their GSDP contribution would indicate. This indicates a lack of formalisation in the level of these states.
The low relative presence of GST taxpayers in high-GSDP states indicates unrealized potential for extending the GST network. These gaps indicate areas where policy focus can enhance tax compliance and promote formal economic activity.
Higher Tax Participation Than GSDP Share States
Conversely, certain states with fairly smaller economies are performing better in terms of GST enrolment. For example, Bihar has 4.3% of the total GST taxpayer base, although it contributes just 2.8% to the national GSDP. Uttar Pradesh and Gujarat also exhibit such trends, where one can see higher formalisation and compliance levels in proportion to their economic size.
The report further adds that the states of Uttarakhand, Chhattisgarh, Jammu & Kashmir, and Himachal Pradesh contribute very little towards the overall GST base—each contributing only 1.4% or less. This again points towards the geographic imbalances in GST enrolment across India.
As the GST regime reaches eight years, these results highlight that though India has made significant progress in expanding the tax net, there is still a lot of space for improvement—specifically in more better-performing economies that are still behind in terms of taxpayer coverage. The SBI report presents important insights that may frame future policy to strengthen GST compliance and speed formalisation in underperforming areas.
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