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Gst Helped Increase Revenue Buoyancy Of States: FM

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 the consumers, she said at the GST Day 2023.

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Finance Minister Nirmala Sitharaman
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Finance Minister Nirmala Sitharaman on Saturday said Goods and Services Tax (GST) has increased revenue buoyancy of states, and the all-round benefit stands out as "exemplary".

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 the consumers, she said at the GST Day 2023.

Giving a comparison of the tax rates pre and post-GST, Sitharaman said, "GST has done justice to the consumers by bringing the rates down compared to the previous regime".

Before GST was introduced, India's indirect tax system was fragmented, where every state was effectively a distinct market for the industry as well as the consumer. 

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

State revenue buoyancy pre-GST was 0.72, while post-GST, it is 1.22. 

"GST has brought in greater buoyancy...Therefore, both Centre and state benefit...today, no state's (revenue) suffers post GST," Sitharaman said.