GST emerges as revenue mainstay in J&K, dealer base more than doubles

Srinagar, Feb 19: Goods and Services Tax (GST) has emerged as the single largest contributor to government revenues in J&K, with collections forming the backbone of the Union Territory’s fiscal framework, the Economic Survey Report 2025–26 reveals.

According to the Economic Survey, government revenue receipts have shown steady growth over the past six years, rising from Rs 13,727 crore in 2019–20 to Rs 21,121 crore in 2024–25, indicating a strengthening revenue base. During the current financial year, revenue of Rs 13,521 crore has been realised up to November 2025, which is about 64 per cent of last year’s total collections.

Taking into account a Compound Annual Growth Rate (CAGR) of around 9 per cent since 2019–20, the Survey projects revenue receipts of Rs 23,022 crore during 2025–26.

GST remains the dominant revenue stream, with collections of Rs 8,586 crore in 2024–25 alone accounting for nearly 60 per cent of total tax revenue and about 40 per cent of overall government revenue. The Survey attributes this performance to sustained efforts aimed at improving GST return compliance and widening the tax base.

A major indicator of improved compliance has been the sharp rise in the number of active GST dealers, which expanded from about 65,000 in 2018–19 to nearly 1.5 lakh in 2024–25. The government has maintained close monitoring of dealers and strengthened enforcement to ensure timely filing and accurate reporting of returns.

To stem revenue leakages, the Survey notes that mechanisms for tracking GST deductions under capital works have been put in place, along with risk-based verification of e-way bills. In addition, the establishment of a Business Intelligence Unit and collaboration with BISAG–N have enabled better scrutiny of return mismatches, identification of red-flag cases and tracking of fake input tax credit (ITC) claims.

Despite the structural gains, GST collections witnessed a temporary slowdown during the ongoing financial year. GST revenue of Rs 5,379 crore has been realised up to November in FY 2025–26, which is Rs 508 crore lower than the Rs 5,887 crore collected during the corresponding period of the previous year.

The Survey attributes the lower collections to the completion of major rail and road infrastructure projects, a slump in commercial activities, and reduced tourist arrivals following the terror attack at Pahalgam. Subsequent developments, including Operation Sindoor and adverse weather conditions such as flash floods during the monsoon season, further affected economic activity.

However, the Survey expresses optimism about a rebound in GST collections, citing recent GST reforms and the resumption of the bi-annual movement of Secretariat staff between the winter and summer capitals, which is expected to revive commercial activity and business transactions.

Beyond GST, tariff from electric power emerged as the second-largest source of revenue, generating Rs 4,908 crore in 2024–25. The Survey points to a substantial increase in power revenues following the implementation of PMDP and RDSS projects, under which smart metering and aerial bunched cabling works are progressing at a rapid pace. These interventions have led to improved quality and continuity of power supply during 2025–26.

Excise revenue remains the third major contributor to government revenues. Collections stood at Rs 2,272 crore in 2024–25. With the introduction of the new J&K Excise Policy 2025–26, duty and fee structures across various categories have been revised to achieve higher revenue realisation. During the current financial year, bidders offered Rs 280.04 crore, and all 305 JKEL-2 vends were licensed. Excise revenue of Rs 1,324 crore has been realised up to November, which is marginally lower by Rs 28 crore compared to the corresponding period of the previous year.

Overall, the Economic Survey concludes that sustained compliance measures, technology-driven monitoring and sector-specific reforms have strengthened the revenue architecture of the Union Territory, positioning GST as the principal driver of fiscal growth while power and excise revenues provide critical support.