New Delhi: Finance minister Nirmala Sitharaman on Monday said GST has helped improve the tax buoyancy from 0.72 (pre-GST) to 1.22 (2018-23), with the states’ buoyancy estimated at 1.15, despite compensation ending two years ago. Tax buoyancy measures the change in tax revenue to change in nominal GDP.
“Without GST, states’ revenue from subsumed taxes from FY 2018-19 to 2023-24 would have been Rs 37.5 lakh crore. With GST, states’ actual revenue amounted to Rs 46.6 lakh crore,” she said in a social media post to coincide with monthly collections for the first time topping the Rs 2 lakh-crore-mark in April and the appointment of Justice (retd) Sanjaya Kumar Mishra as first president of GST Appellate Tribunal (GSTAT).
Sitharaman said govt has adopted a pro-poor approach in fixing the rates, which have been lowered for several goods and services in seven years since the new regiment kicked in. While the suggested revenue neutral rate (RNR) was 15.3%, it came down to 11.6% in 2019, she said.
“Despite GST rate being less than prescribed RNR and Covid affecting the revenues, GST collections (as % of GDP) have now reached the levels they were before GST (both net and gross). This demonstrates that Centre and states, collectively, through better tax administration, are able to collect the same revenue with a lower burden on our taxpayers,” FM said. GST, launched in July 2017, had subsumed 17 taxes and 13 cesses into a five-tier structure.
