GST, net of refunds, yields close to ₹20 trillion to both the Centre's and states' exchequer.
Prime Minister Narendra Modi had described it as a 'good and simple tax', while Opposition leader Rahul Gandhi had called it 'Gabbar Singh Tax'. Where does the truth sit? Perhaps somewhere in between.
The goods and services tax (GST), net of refunds, now yields close to ₹20 trillion to the exchequer -- both the Centre's and states' -- with average annual receipts three times the receipt during the pre-GST period from taxes that were subsumed in GST (Chart 1).
However, the average annual growth rate for receipts is a shade lower than that in the pre-GST period.
Part of the reason could be the contraction seen during 2020-2021, the Covid-hit year. But that had averaged out to an extent the next year (Chart 2).
These numbers don't reveal much unless seen in the context of the overall economy.
Here, too, the collection-to-gross domestic product (GDP) ratio is yet to match the pre-GST period.
The same is the case with its buoyancy (Charts 3 and 4).
Of the items kept out of GST -- alcohol, petrol and diesel, a part of real estate, and a part of electricity -- the easiest to bring into the GST fold is petroleum.
That is so because it can be implemented once the Centre and states agree, without the need for any Constitutional amendments.
Non-GST revenues from petroleum accounted for one-third to more than half of GST receipts in the eight years since its rollout (Chart 5).
GST is a destination-based tax. So, it was expected to reduce regional imbalances.
This objective has been met to an extent since the average annual growth rate for GST collections in most laggard states is higher than the national average. Only in Uttar Pradesh it is a shade lower (Chart 6).
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