IMPACT OF GST ON TAX REVENUE IN INDIA

India’s tax system has always depended significantly on indirect taxes. Until the tax changes of the 1990s, indirect taxes were the most important source of tax income. The main rationale for relying heavily on indirect taxes was that India’s majority of people were impoverished, and therefore broadening the base of direct taxes had inherent constraints. However, the Indian indirect taxation system is characterised by a cascading, distorting tax on goods and services production, which results in poorer productivity and slower economic growth. In the current system, there are several taxes, some of which are levied by the federal government and the rest by the states; to eliminate this multiplicity of taxes and reduce the tax payer’s burden, a simple tax, such as the Goods and Services Tax, is necessary.