Using 2023-24 data, the correlation between States’ GSDP and direct tax collections is 0.75, while the correlation between GSDP and GST collections is as high as 0.91. This strong relationship suggests that GSDP share is a meaningful indicator of the accrual of central taxes at the State level. By contrast, GSDP shares display a high correlation with tax collections (0.81) and a moderate correlation with devolution shares (0.58). Only in Haryana, Karnataka and Maharashtra, the GSDP share is less than tax collection share, likely due to the concentrations of registered offices of multi-State firms. In Tamil Nadu, GSDP share exceeds tax collections, reflecting production activity whose tax payments are recorded elsewhere.

Source: The Hindu January 09, 2026 06:58 UTC