Tamil Nadu’s revenue from its own tax sources is largely performing well across various categories, with the exception of Value Added Tax (VAT), as stated by T. Udhayachandran, Principal Secretary of Finance for the state.
For the fiscal year 2024-25, the state’s estimated own tax revenue stands at ₹1,92,752 crore in the revised estimates, slightly less than the ₹1,95,173 crore initially forecasted in the budget estimates. Looking ahead to 2025-26, revenue is anticipated to rise to ₹2,20,895 crore. This figure includes projections of ₹1,63,930 crore from Commercial Taxes, ₹26,109 crore from Stamps and Registration, ₹13,441 crore from Motor Vehicle Taxes, and ₹12,944 crore from State Excise.
“We have been excelling in GST collections and are among the top states in India. Our growth rate exceeds the national average, and we have enhanced our tax administration using data analytics to effectively recover arrears,” Udhayachandran explained.
The state’s GST collections are expected to increase by 22.74% to ₹93,620 crore for 2025-26, compared to ₹76,277 crore in the revised estimates for 2024-25.
However, he acknowledged the presence of certain issues related to digital payments and associated areas. “There are some challenges that require attention. We are collaborating with payment aggregators and collecting data to ensure that revenue from the digital economy integrates into our system. We have also reached out to the GST Network and are actively addressing this matter,” he added.
Motor vehicle tax revenue has shown strong performance as well, with a projected growth of over 12% to ₹13,441 crore for FY26. While the transport vehicle segment remains robust, sales of four-wheelers have increased since January, though the sustainability of this growth is yet to be determined.
Furthermore, revenue from stamp duty and registration charges is expected to rise by 14% to ₹26,110 crore. In contrast, sales tax/VAT collections, primarily derived from petrol and liquor sales, continue to lag behind, reflecting lower growth compared to other tax categories. For FY26, sales/VAT revenue is estimated to grow by 7% to ₹70,311 crore according to the budget estimates.
