DO DIGITAL PAYMENTS SPUR GST REVENUE: INDIAN EXPERIENCE

Surender Kumar

Bulletin of Monetary Economics and Banking, 2024, vol. 27, issue 3, 459-482

Abstract: This paper measures the effect of digital payments on enhancing Goods and Services Tax (GST) revenue in India using monthly time-series information on tax collections and digital payments. By employing an autoregressive distributed lag cointegration framework, we find that the GST elasticity concerning digital transactions is about 0.54. The implication is that a one-standard-deviation increase in the value of digital transactions spurs GST revenue of about INR 62 billion, and a one-standard-deviation increase in Index of Industrial Production (IIP) enhances GST revenue by about INR 8 to 12 billion. These results suggest that enhancing digital transactions is an effective way of increasing tax revenue.

Keywords: Digital payments; GST revenue; Tax collections; India (search for similar items in EconPapers)
JEL-codes: G18 G20 H26 H32 O16 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:27:y:2024:i:3d:p:459-482

DOI: 10.59091/2460-9196.2279

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