GROWTH AND BUOYANCY OF GOODS AND SERVICES TAX REVENUE IN MAHARASHTRA: AN EMPIRICAL ASSESSMENT FROM 2018–19 TO 2024–25
DOI:
https://doi.org/10.65327/ans.v12i3.2575Keywords:
Goods and Services Tax, SGST, tax buoyancy, tax revenue, Maharashtra, GSDP, fiscal federalism, revenue productivityAbstract
This study analyzes the growth and buoyancy of the revenue from State Goods and Services Tax (SGST) of Maharashtra from 2018-19 to 2024-25. The analysis is based on secondary fiscal and macroeconomic data from Government of Maharashtra and the data was combined by year-on-year growth rates, compound annual growth rates (CAGR), SGST-to-GSDP ratios, annual buoyancy coefficients, period buoyancy measure and log-log regression of SGST revenue on nominal Gross State Domestic Product (GSDP). SGST revenue increased from ₹82,352 crore in 2018–19 to ₹167,905 crore in 2024–25 (revised estimate), implying a CAGR of 12.61 percent. Over the comparable series, there has been a nominal growth in GSDP from ₹25,28,854 crore to ₹45,31,518 crore with a CAGR of 10.21 percent. The incidence of SGST on nominal GSDP has gone up from 3.26 percent to 3.71 percent. The period buoyancy (based on CAGR) is 1.23 and the elasticity (based on log-log regression) is 1.35. This year-wise trend is very irregular as the impact of the COVID shock led to simultaneous revenue and economic activities contraction in 2020-21 while it had a strong rebound in 2021-22 and remained in double digits growth in SGST ever since. The results suggest that after the disruption caused by the pandemic, Maharashtra's performance on the revenue side of the GST has improved significantly, albeit with a few caveats: the short time frame sampled for the year and policy/compliance changes that occurred during that year make it difficult to conclude that the GST has gained in structural buoyancy as a tax elasticity. The paper concludes that a broad path towards formalisation of revenue collection, strengthening compliance analytics, minimising revenue evasion, and having an effective tax administration with an acceptable compliance burden, will all be key to sustain revenue productivity.
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