Sikkim records highest GST growth among smaller states with 39% rise in August

Sikkim has registered a sharp surge in Goods and Services Tax (GST) collections for August 2025, underlining stronger economic activity and better tax compliance in the state.

According to data released by the Central Board of Indirect Taxes and Customs (CBIC), Sikkim collected Rs 454 crore in August this year, compared to Rs 326 crore in the same month last year. This reflects a growth of 39 per cent—the highest among all smaller states in India.

Officials said the robust GST performance will give the state more fiscal space to push development projects. “Higher GST revenue is a positive indicator for the state’s economy. These funds will help us deliver better services and support development across all districts,” a senior official from the Finance Department said.

Sikkim’s performance also stands out in the Northeast. Meghalaya recorded a 35 per cent increase, while Nagaland’s GST collections grew by 33 per cent. Assam collected Rs 1,496 crore, showing steady growth, whereas Manipur experienced a sharp decline of over 20%, with collections falling to Rs 42 crore. Experts say that Sikkim’s growth highlights the resilience of the local economy and the effectiveness of improved tax compliance mechanisms.

At the national level, India’s GST collections for August 2025 remained robust. The country’s gross GST revenue reached ₹1.86 lakh crore, up 6.5 per cent from August 2024. After accounting for refunds, the net GST collection stood at Rs 1.67 lakh crore, reflecting a 10.7 per cent growth. Among larger states, Maharashtra collected Rs 28,900 crore, Karnataka Rs 14,204 crore, Tamil Nadu Rs 11,057 crore, and Uttar Pradesh Rs 9,086 crore, all showing healthy growth between 9 per cent and 15 per cent.

In Sikkim, GST growth is not limited to a single sector. Traders and business owners report higher activity in retail, hospitality, tourism, and transport sectors. Gangtok, the state capital, has seen a visible uptick in commercial transactions, with hotels, restaurants, and retail shops reporting higher sales during August. Tourism, which contributes significantly to the state’s economy, has been a key driver of GST revenue. The return of domestic tourists after seasonal fluctuations contributed to increased hotel bookings and retail sales.

The surge in GST collections also reflects the gradual modernization of Sikkim’s business environment. Small and medium-sized enterprises, which form a significant part of the state’s economy, are increasingly adopting digital accounting and billing solutions. This has reduced errors and delays in reporting, leading to higher compliance rates and, ultimately, better revenue for the state.

The additional funds from GST are expected to support the state government in implementing a range of developmental projects. Road construction and maintenance, especially in remote areas, is a priority. With the hilly terrain and frequent landslides, maintaining connectivity is critical for both economic growth and public welfare. Health initiatives, including expansion of primary health centers and provision of better medical facilities, are also set to benefit from the revenue boost.

Education is another key area where GST collections will have an impact. Sikkim has been investing in school infrastructure, teacher training, and digital learning tools. The improved revenue position will enable the government to accelerate these programs, ensuring more students have access to quality education.

The rise in Sikkim’s GST comes just after the crucial GST Council meeting held on September 3–4, where Union Finance Minister Nirmala Sitharaman and state finance ministers discussed rate rationalisation and other reforms. 

While overall GST growth is moderating in some states, the robust performance in Sikkim demonstrates a resilient economy and a maturing tax system. Sandeep Sehgal, Partner at AKM Global, remarked, “Sikkim’s 39 per cent growth reflects expanding business activities and higher compliance. The trend also shows early signs of festive demand, which is encouraging for future collections.”