Revenue Performance Assessment of Indian GST
Publication dateApr, 2023
DetailsNIPFP Working Paper No. 392
By comparing comparable revenue streams of pre- and post-GST periods, in this paper we assess the revenue performance of GST in India for the period 2012-13 to 2022-23. Sustaining revenue streams of the Union and State governments (in terms of percentage share in nominal Gross Domestic Product or GDP) between the pre- and a post-GST period is important for sustainable Public Finance Management. We observe that post-GST tax buoyancy in the GST regime has improved for the Union, state and general governments. The GST-to-GDP ratio of the Union as well as state governments has not yet improved during the post-GST period as compared to the equivalent share of respective revenue streams in GDP during the pre-GST period. Based on available information, we estimate C-efficiency ratio (or collection efficiency), Effective Tax Rates, Compliance Gap and Policy Gap of GST for the period Q2:2017-18 to Q3:2022-23. We find that average C-efficiency of GST is 0.54 (or 54%) which is in line with available evidence from developing Asian countries. Average ETR has gone up from 10.91 per cent in 2020-21 to 12.21 per cent in 2021-22 and 12.56 per cent up to Q3:2022-23 of 2022-23. The share of policy gap in C-efficiency is higher than compliance gap which is in line with available evidence from EU and OECD countries.