Abstract
Assessing the revenue implications of GST on Indian state finances cannot be contained to compare the revenue stream which is subsumed into GST with State GST collection alone. Since GST subsumes many taxes from state tax bases, comparing the revenue performance of taxes which are outside the GST framework would be equally important. Moreover, in the federal system revenue implication of shortfall in tax collection of the federal government is also likely to spill-over to sub-national finances in terms of lower tax devolution. Sustaining revenue streams of state governments is important for sustainable Public Finance Management (PFM) and therefore a comprehensive assessment of state finances before and after GST would be important. This paper attempts to fill the gap in exiting literature by assessing the revenue of 18 major states during pre- and post-GST periods.
This chapter is a re-publication of the author’s working paper and is being re-used here with permission Mukherjee, S. (2023). Revenue Implications of GST on Indian State Finances, NIPFP Working Paper Series, Working Paper No. 388. National Institute of Public Finance and Policy, New Delhi: India.
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Notes
- 1.
During GST transition period (1 July 2017 to 30 June 2022) states receive GST compensation based on the difference between projected state GST revenue and actual state GST collection (including IGST settlement). The projection of state GST revenue is based on the revenue that states collected in 2015–2016 (base year) from taxes subsumed into GST (also known as revenue under protection) and 14% annual growth (Year-on-Year) in revenue under protection from the base year 2015–2016.
References
Mehta, D., & Mukherjee, S. (2021). Emerging issues in GST law and procedures: An assessment. NIPFP Working Paper No. 347, National Institute of Public Finance and Policy, New Delhi.
Mukherjee, S. (2019). State of public finance and fiscal management in India during 2001–16. Working Papers 265, National Institute of Public Finance and Policy, New Delhi.
Mukherjee, S. (2022). Revenue assessment of goods and services tax (GST) in India. NIPFP Working Paper No. 385, National Institute of Public Finance and Policy, New Delhi.
Mukherjee, S. (2023). Revenue performance assessment of Indian GST. NIPFP Working Paper No. 392, National Institute of Public Finance and Policy, New Delhi.
Mukherjee, S., & Badola, S. (2022). Public finance management in India in the time of COVID-19 pandemic. Indian Economic Journal, 70(3), 452–547.
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Mukherjee, S. (2023). Revenue Implications of GST on Indian State Finances. In: Srivastava, D.K., Shanmugam, K.R. (eds) India’s Contemporary Macroeconomic Themes. India Studies in Business and Economics. Springer, Singapore. https://doi.org/10.1007/978-981-99-5728-6_6
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DOI: https://doi.org/10.1007/978-981-99-5728-6_6
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