Goods and Services Tax (GST) showcases cooperative federalism, empowering states | Business News

Goods and Services Tax (GST) collections have reached pre-GST levels as a percentage of Gross Domestic Product (GDP), announced Union Finance Minister Nirmala Sitharaman on Monday. She emphasized the significant contribution of GST to state revenues, dispelling the myth that all collections are pocketed by the Centre.

The statement by Sitharaman coincided with the oath-taking ceremony of Justice (Retd) Sanjaya Kumar Mishra as the President of the GST Appellate Tribunal (GSTAT). This marks the operationalization of the GSTAT after a long gap of nearly seven years since the rollout of the GST regime in July 2017.

Monthly gross GST collections have been on the rise, surpassing Rs 2 lakh crore recently, according to the Finance Ministry’s data for April. Sitharaman highlighted that despite the GST rate being lower than the prescribed Revenue Neutral Rate and the impact of COVID-19 on revenues, GST collections as a percentage of GDP have now returned to pre-GST levels.

The Finance Minister also mentioned that GST exemplifies cooperative federalism in India, empowering states and improving tax buoyancy. She clarified that a significant portion of GST collections is devolved to the states, benefiting them financially.

Furthermore, Sitharaman pointed out that GST has led to lower taxes on essential items compared to pre-GST rates, benefiting consumers. She emphasized the pro-poor approach of GST, with the effective weighted average GST rate consistently decreasing since 2017.

Former Chief Economic Adviser Arvind Subramanian highlighted that despite recovery from the pandemic and better implementation, GST revenue for FY24 has not surpassed pre-GST levels. Sitharaman, as the Chairperson of the GST Council, ensured equal representation of states in decision-making processes, promoting consensus-driven outcomes.