Revenue Performance Assessment of Indian GST

Sacchidananda Mukherjee

Working Papers from National Institute of Public Finance and Policy

Abstract: 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 government as well as in overall GST collection. However, average tax buoyancy of State portion of GST has not improved yet. GST-to-GDP ratio of the Union as well as state governments not yet improved during post-GST period as compared to 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 evidences 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 upto 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 evidences from EU and OECD countries.

Keywords: Revenue performance assessment; Goods and Services Tax (GST); C-efficiency; Compliance Gap; Policy Gap; Effective Tax Rate (ETR); India (search for similar items in EconPapers)
JEL-codes: E62 H20 H26 (search for similar items in EconPapers)
Pages: 33
Date: 2023-04
New Economics Papers: this item is included in nep-eff, nep-mac and nep-pub
Note: Working Paper 392, 2023
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Persistent link: https://EconPapers.repec.org/RePEc:npf:wpaper:23/392

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