The idea that the Center benefited only from GST receipts has been criticized by Finance Minister Nirmala Sitharaman. According to her article on X, states receive 42 percent of the Central GST (CGST), about 50 percent of the Integrated GST (IGST), and 100 percent of the State GST (SGST) through devolution, which is based on recommendations made by the Finance Commission.
She stated, "It is a myth that the Center keeps all GST collections for itself." Tax buoyancy has increased under GST, rising from 0.72 (pre-GST) to 1.22 (2018–23). State revenues are still high at 1.15 even if compensation has ended.
"States' subsumed tax receipts from 2018–19 to 2023–24 would have totaled Rs 37.5 trillion if GST hadn't been implemented. States' real revenue with GST was Rs 46.56 trillion, the author continued.
As a percentage of GDP, GST collections have now returned to pre-GST levels, even though the GST rate was lower than the required Revenue Neutral Rate and COVID-19 had an impact on revenues. This includes both net and gross GST collections. This shows that by working together to improve tax administration, the federal government and the states can raise the same amount of money while putting less of a strain on their citizens, according to Sitharaman.
She claimed that the Goods and Services Tax (GST) "exemplifies cooperative Federalism in India, empowering states" and that it has increased state revenue.
Since 2017, the effective weighted average GST rate has continuously decreased, indicating a pro-poor policy. The proposed revenue neutral rate was 15.3 percent, but in 2017 it was only 14.4 percent, and in 2019 it was only 11.6 percent, according to her.
Sitharaman emphasized that increased economic activity was the driving force behind the recent milestone of GST receipts surpassing Rs 2 lakh crore, indicating a promising future for the country's fiscal environment.
Sitharaman outlined how the Goods and Services Tax structure has changed over time, emphasizing how a commitment to progressive tax policy has been shown by the constant decline in the effective weighted average GST rate. She went into further detail about the steps taken to guarantee that tax rates are reasonable and that the advantages are transferred to consumers, emphasizing the National Anti-profiteering Authority's involvement in this process.
