GST's revenue performance: Centre's sacrifice for cooperative federalism

Over the past few years, most commentators have rightly emphasised the tensions in Centre-state fiscal relations, pointing especially to the Centre's repeated recourse to non-sharable cesses

It has now been seven years since the Goods and Services Tax (GST) was introduced. The transitional compensation mechanism has expired; the loans taken during Covid will soon be repaid; and the fate of the compensation cess needs to be decided.

So now is a good time to review the GST’s revenue performance and assess its future.
 

Our new research yields some findings that are relevant for the debate over the GST’s future. In particular, it shows that the Centre has forgone substantial revenue over the past seven years, a contribution that has been overlooked in the