Are Indian GST revenues really as buoyant as they appear to be?
GST) revenue hit ₹1.72 trillion in October, the second-highest since the rollout of this indirect tax regime. The average monthly GGST collection during the first half of 2023-24 has been ₹1.65 trillion, which has become a new benchmark. This monthly revenue figure has been tracked in recent years as an indicator of economic growth.
The GST regime was rolled out in July 2017 with the aim of replacing multiple indirect taxes levied by the central and state governments, eliminating the cascading effects of taxation to help lower the tax burden on consumers, while also ensuring uniformity in the tax structure across India. A lot of water has flown since. GST has meant greater tax buoyancy for both the Centre and states, enabling the Centre’s ambitious infrastructure programme and pursuit of fiscal consolidation.
Barring the pandemic years, the average monthly GGST mop-up has been on an uptrend. It surged from ₹0.90 trillion in 2017-18 to ₹0.98 trillion in 2018-19 and ₹1.02 trillion in 2019-20. In 2020-21, it dropped to ₹0.95 trillion but rebounded as soon as the pandemic subsided and the economy regained momentum; the average monthly intake surged to ₹1.24 trillion in 2021-22 and then to ₹1.51 trillion in 2022-23.
Revenue buoyancy: The government claims that the GST regime has been exemplary. Finance Minister Nirmala Sitharaman has said that it has reduced the tax burden on consumers and increased revenue buoyancy for states and the Centre. Notably, in the first half of 2023-24, the government realized GGST of ₹9.93 trillion, which is 11.20% more than a year earlier.
It is expected that this buoyancy in collections will continue through the rest of the year. Any tax system can be assessed through tax buoyancy. According to
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