NIPFP pegs best-case GST revenue gap at ₹1.95 lakh crore

Institute says shortfall may go up to ₹2.45 lakh cr., exceeding Council’s forecast

The revenue shortfall for the Goods and Services Tax (GST) compensation payable to States in 2020-21 could be about ₹1.95 lakh crore in the best-case scenario, significantly lower than the ₹2.35 lakh crore estimated by the GST Council, as per a new research paper by the National Institute for Public Finance and Policy (NIPFP).

In a paper titled ‘The Pandemic and GST Revenue: An Assessment for Union and States’, Sacchidananda Mukherjee, an associate professor at NIPFP, estimated that even in the worst-case scenario, the revenue shortfall for GST compensation to States won’t exceed ₹2.45 lakh crore. “Though the spread of COVID-19 is on an apparent decline in India, the economic impact of the pandemic is still evolving, as new waves of COVID-19 infection are striking locally. Any estimate on revenue impact, thus, may not be free from shortcoming and constraints. However, as GDP data of the last two quarters is now available, and as GST shows the brightest sign of recovery among all revenue streams, an attempt is made in this paper to project GST revenue for 2020-21,” it said. Using actual GST revenues between April and October this year and GST collection trends in the past 13 quarters since the indirect tax regime was introduced, different scenarios were extrapolated to estimate likely GST revenue overall, as well as State-wise collections. The maximum GST revenue gaps this year are expected for Goa, Punjab, Chhattisgarh, Kerala and Chhattisgarh, the exercise suggested.

“The revenue gap in State GST collections is expected to vary between ₹2.85 lakh crore and ₹3.27 lakh crore. GST compensation cess collection in FY21 is expected to vary between ₹82,242 crore and ₹90,386 crore. Therefore, shortfall in GST compensation fund is expected to vary between ₹1.95 lakh crore to ₹2.45 lakh crore,” the paper concluded.

The NIPFP is an autonomous research institute, and was set up as a joint initiative of the Ministry of Finance and the erstwhile Planning Commission, with several State governments, and assists the Central, State and local governments in formulating public policies.

You have reached your limit for free articles this month.

Subscription Benefits Include

Today’s Paper

Find mobile-friendly version of articles from the day’s newspaper in one easy-to-read list.

Unlimited Access

Enjoy reading as many articles as you wish without any limitations.

Personalised recommendations

A select list of articles that match your interests and tastes.

Faster pages

Move smoothly between articles as our pages load instantly.


A one-stop-shop for seeing the latest updates, and managing your preferences.


We brief you on the latest and most important developments, three times a day.

Support Quality Journalism.

*Our Digital Subscription plans do not currently include the e-paper, crossword and print.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.