Tamil Nadu’s own tax revenue is performing well across most components, except for Value Added Tax (VAT), according to T Udhayachandran, Principal Secretary-Finance, Government of Tamil Nadu.
For 2024-25, the state’s own tax revenue is estimated at ₹1,92,752 crore in the Revised Estimates, slightly lower than the ₹1,95,173 crore projected in the Budget Estimates. In the Budget Estimates for 2025-26, the revenue is projected to grow to ₹2,20,895 crore. This includes ₹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 are performing exceptionally well in GST collections, ranking among the top states in the country. Our growth rate surpasses the national average, and we have strengthened our tax administration through data analytics to recover arrears effectively,” said Udhayachandran.
GST collections are expected to rise by 22.74 per cent to ₹93,620 crore in 2025-26, up from ₹76,277 crore in the revised estimate for 2024-25.
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However, he acknowledged certain challenges in digital payments and associated areas. “There are some grey areas that need attention. We are collaborating with payment aggregators and gathering data to ensure revenue from the digital economy flows into our system. We have also written to the GSTN (Goods and Services Tax Network) and are actively working on this issue,” he added.
Motor vehicle tax collections have also shown strong performance as the budget has projected over 12 per cent growth at ₹13,441 crore for FY26. While the transport vehicle segment remains buoyant, four-wheeler sales have picked up since January, though the growth trend remains to be seen.
Revenue from stamp duty and registration charges is projected to grow by 14 per cent at ₹26,110 crore. However, sales tax/VAT collections, which come from petrol and liquor sales, continue to lag, showing lower growth compared to other tax components. For FY26, sales/VAT revenue is projected to grow at 7 per cent ₹70,311 crore (budget estimate).
