Mithilesh Kumar Sinha
Retired Professor
The northeastern states of India have greatly profited from the implementation of a destination-based Goods and Services Tax (GST) system. As these areas are predominantly consumer markets rather than manufacturing centers, this change has resulted in a greater allocation of tax revenue directly to them. The region has experienced a compounded annual growth rate in GST exceeding 27.5%.
However, the GST collection across the northeastern states of India highlights significant structural and volumetric disparities. This divide is largely influenced by considerable variations in population, geographic dimensions, and the differing degrees of industrial development in each state.
This article analyzes the trends in GST collection and the regional disparities present in India’s northeastern states from the fiscal years 2017–18 to 2025–26. By utilizing secondary data and employing statistical methods such as growth rates, percentage shares, and comparative analyses, the study uncovers a notable increase in GST revenue, which has more than doubled throughout the examined period. The results indicate that the northeastern regions continue to face challenges due to structural limitations, including insufficient industrialization, lower income levels, and inadequate infrastructure.
The North-Eastern region of India contributes a minimal portion to the country's GST revenue, primarily due to its limited economic foundation. Assam stands as the largest contributor, with its share increasing from 0.92% to 1.06%, whereas other states contribute less than 0.1% each. Despite an increase in GST collections in absolute figures, the overall contribution remains insignificant. This situation is largely attributed to factors such as low levels of industrialization, reduced income levels, geographical challenges, and smaller market sizes, highlighting the necessity for targeted development policies. The GST collections in Northeast India reveal significant disparities, predominantly influenced by Assam, which accounts for the majority of the region's revenue. While Assam surpasses the national growth averages, smaller states like Mizoram, Nagaland, and Manipur show considerably lower absolute collections, underscoring profound structural and economic inequalities.
Table 1: Total Revenue and Percentage Share by Northeast States States
| Arunachal Pradesh | Assam | Manipur | Meghalaya | Mizoram | Nagaland | Tripura | Sikkim |
2017-18 | 120.362 | 4970.93 | 122.598 | 648.015 | 66.622 | 104.445 | 305.378 | 1185.94 |
% to India’s GST | 0.02 | 0.92 | 0.02 | 0.12 | 0.01 | 0.02 | 0.06 | 0.22 |
2025-26* | 1015.33 | 12391.07 | 508.39 | 1612.34 | 289.35 | 578.76 | 789.79 | 2951.27 |
% to India’s GST | 0.09 | 1,06 | 0.04 | 0.14 | 0.05 | 0.05 | 0.07 | 0.25 |
Economic Survey of India Various Issues * 2025-26 (April to November)
Assam leads the Northeast in revenue collections, consistently accounting for the largest absolute volume and housing over 60% of the region's registered taxpayers. Despite having the smallest population, Sikkim frequently ranks second in total GST collections within the Northeast. Arunachal Pradesh boasts some of the highest compound annual growth rates (CAGRs) in the nation, surpassing 30%. Although Mizoram, Nagaland, and Manipur exhibit more modest absolute collections, they have experienced the most notable enhancements in their tax-to-GSDP (Gross State Domestic Product) ratios in recent years. Nagaland has achieved one of the highest GST growth rates in the country, with a remarkable 37% increase in collections, amounting to ₹627 crore during a recent fiscal period. Tripura and Meghalaya present relatively moderate total collections but possess significant shares of registered tax bases, indicating a trend towards greater formalization in these states.
The North-East region showcases a high growth rate alongside a low fiscal mass. Arunachal Pradesh (+744%), Nagaland (+454%), and Mizoram (+334%) exhibit extraordinary growth rates; however, their combined share remains below 2%. They represent a demographic and economic frontier that has yet to establish a substantial revenue base.
Positive Growth Trends
In spite of the significant differences in overall volume, the smaller states in the northeastern region have consistently surpassed the national average regarding the growth rate of GST revenue in recent years. Enhanced digital compliance and localized enforcement have contributed to an increase in internal tax revenues, elevating tax-to-GSDP ratios into a more favorable range.
The pronounced regional disparities in Goods and Services Tax (GST) collections significantly impede the development of Northeast India by limiting independent fiscal capacity, increasing dependence on Central bailouts, and revealing persistent industrial and infrastructural deficiencies.
To bridge these gaps and enhance local revenue in the Northeast, focused policy interventions should prioritize compliance, sectoral growth, and digital integration. It is essential to encourage the informal sector and unorganized traders in the Northeast to register. States can advocate for the use of the Composition Scheme, which provides simplified compliance and reduced tax rates for small businesses and service providers. Additionally, customizing local tourism packages (for instance, implementing lower GST rates for budget hotels) and reducing GST on locally produced GI-tagged agricultural products (such as organic teas and spices) can stimulate formal economic activity. Furthermore, the implementation of AI-driven invoice matching and improved monitoring of E-Way Bills is necessary.
