Bihar Nears Revenue Target with Strong GST Growth in FY26
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| HT |
Patna: The has reported strong revenue performance for FY 2025–26, with total internal resource mobilisation reaching an estimated ₹56,000 crore against a target of ₹59,520 crore. Officials indicated that the near-target achievement reflects improved tax compliance and stable economic activity across key sectors.
Fiscal Context: Growth Driven by GST Collections
The primary driver of revenue growth has been the commercial taxes department, which recorded robust gains in State GST collections. Total GST revenue stood at ₹32,801 crore, marking an 11.67% increase over the previous fiscal year. After IGST adjustments, net State GST collections reached ₹32,077 crore, reflecting a 9.20% year-on-year growth.
According to officials, Bihar’s GST growth rate outperformed the national average of 6.4%, placing it among the top-performing states, second only to Karnataka in overall cash collections growth.
Department Performance: Compliance and Enforcement
Secretary of the commercial taxes department, , attributed the growth to tighter enforcement and reduced tax leakages. Enhanced compliance measures and action against fraudulent practices played a key role, with ₹1,363 crore collected through penalties imposed on 369 firms involved in fake invoicing for input tax credit claims.
Overall commercial tax collections reached ₹43,324 crore, achieving 93.17% of the department’s annual target of ₹46,500 crore.
Challenges: VAT and Consumption Trends
Despite strong GST performance, certain areas saw moderation. VAT collections from petroleum products remained steady but were impacted by reduced tax rates on aviation turbine fuel and natural gas. Additionally, a shift toward electric-powered irrigation in rural areas has slightly reduced diesel consumption, affecting fuel-related tax revenues.
Officials also noted a ₹700 crore deduction linked to arrears, which impacted overall collections.
Broader Revenue Picture and Spending
Revenue from four major departments—commercial taxes, registration, transport, and land revenue—collectively contributed to the ₹56,000 crore figure. In the non-tax segment, mining revenues were targeted at ₹3,850 crore.
The state also received central devolution of approximately ₹1.40 lakh crore, close to its revised estimate of ₹1.43 lakh crore, strengthening its fiscal position.
On the expenditure side, Bihar is expected to fully utilise its budget of ₹3.17 lakh crore, driven by significant spending on welfare schemes such as the Mukhyamantri Mahila Rojgar Yojana and enhanced social security benefits for vulnerable groups.
Economic Implications
The strong revenue performance provides fiscal stability for Bihar, enabling continued investment in infrastructure, welfare schemes, and administrative expenditure such as salaries and pensions. High GST growth also indicates improved formalisation of the economy and better tax administration.
However, sustaining this growth will depend on maintaining compliance levels and managing sector-specific fluctuations, particularly in fuel consumption and industrial activity.
Conclusion
Bihar’s near-target revenue collection in FY26 highlights a balanced fiscal performance, supported by strong GST growth and improved enforcement. While minor gaps remain, the state’s financial outlook appears stable as it heads into the next fiscal year.
Our Final Thoughts
Bihar’s fiscal performance in FY26 reflects a steady strengthening of its revenue base, particularly through GST reforms and compliance measures. While the state narrowly missed its target, the overall trajectory remains positive, supported by strong enforcement and economic activity. The real test will be sustaining this momentum while managing expenditure pressures and evolving consumption patterns. If the current trend continues, Bihar could further solidify its fiscal position in the coming years.