GST Revenue Performance and Fiscal Capacity in India: Evidence from a Comparative ASEAN Perspective

Abstract

Goods and Services Tax (GST) is a significant reform of the fiscal nature aimed at enhancing the mobilisation of revenues and enhancing the
fiscal capacity in India by introducing a common destination-based consumption tax. The paper examines the GST revenue performance in India
over the period 2017 2022 and compares it with VAT/ GST systems in the selected economies of the ASEAN. As per the results, it is seen that in
India GST revenue grew by 21.3 per cent in 2018 and by 29.8 per cent in 2021 even though a contraction of -6.5 per cent was witnessed in the
pandemic year. On the contrary, ASEAN VAT/GST systems registered fairly constant average revenue growth between 3.9 per cent to 7.3 per
cent. The average tax to GDP ratio of only 11.7 per cent in India is lower than most of the ASEAN economies such as Thailand (16.8 per cent)
and Vietnam (18.1 per cent). Regression findings show that there is a positive relationship between GST revenue and economic growth (GDP =
1.92 + 0.47 GST revenue; R(squar = 0.67), whereas ANOVA proves that there are significant cross-country variations in VAT/GST performance
(F = 6.82, p = 0.004). The results point to the fact that in India, GST is a high growth process of transition, and in ASEAN, the VAT/GST reflect
the mature fiscal frameworks.)