GST Has Increased Revenue Buoyancy Of States, Says Nirmala Sitharaman

Finance Minister Nirmala Sitharaman said that states are not losing out by joining the Goods and Services Tax system, adding that the system has in fact increased the revenue buoyancy of the states.

"The introduction of GST has brought the net tax on consumers down," she said while addressing the GST Day celebrations in New Delhi on Saturday.

The minister also stated that pre-GST, India's indirect tax system was fragmented, with every state effectively a distinct market for both industries and consumers.

"The multiplicity of taxes in the pre-GST regime resulted in a 'tax-on-tax' effect, causing the same product to be taxed multiple times and hence becoming costlier for consumers," she said.

Evidencing the revenue benefit to states, Sitharaman stated that State revenue buoyancy pre-GST was 0.72, while post-GST it is 1.15 (excluding the benefit of GST Compensation given to states).

"Whether it is the common consumer, the state government, a matter of tax buoyancy, or making it digital and simpler, GST stands out as an exemplar," Sitharaman added.

Also speaking at the GST Day celebrations, Revenue Secretary Sanjay Malhotra lauded the Central Board of Indirect Taxes for its work, adding further that the aim would be to work towards completely removing the compliance burden for tax payers.

The number of tax payers covered by the GST ambit was recorded at 136 lakh as of June 2023.