Economic and Political weekly : Sep 13 2024 | Vol. 59, Issue No. 37, 14 Sep, 2024

This paper coauthored by the CEGIS Strategic Public Finance team, examines in detail seven years of goods and services tax revenue performance. The article analyses overall revenue performance since the inception of the GST, the impact and importance of the cess compensation, relative impact on the revenues of individual states, and looks at potential ways forward as GST enters its next phase. The views and any errors are those of the authors alone.

The main findings are as follows. First, overall revenues have only now converged to pre-GST levels. Second, the union forewent up to 1% of gross domestic product in GST revenues for each of the seven years. Third, the GST has worked broadly as expected to benefit the poorer states. Fourth, going forward, folding the cess into the regular rate structure can ensure that revenue guarantees for the states may not be necessary. Finally, the revenue guarantee experience holds important lessons.