Sage Journals: Discover world-class research

Abstract

Taxes on commodities and services (TOCS) contribute, on average, 62.31% of the general government’s total tax collection in India. This shows that a larger share of the tax burden rests on consumption than taxes on income, property, capital and other transactions. Indian public finance literature lacks a comprehensive assessment of tax collection from TOCS. This article assesses the trends in revenue mobilisation from TOCS during 2011–2023 for the Union, states and general governments. Notably, during 2018–2023, half of the TOCS collection and two-thirds of the total tax revenue of the general government were collected outside the goods and services tax (GST) system. This observation points to the potential for the GST system to broaden its coverage in the future, encompassing a more comprehensive range of commodities and services. This expansion could significantly impact the landscape of tax collection in India.

Keywords

Tax revenue taxes on consumption goods and services tax public finances India

Get full access to this article

View all access options for this article.

References

Acosta-Ormaechea

, & Yoo

(2012). Tax composition and growth: A broad cross-country perspective . IMF Working Paper No. WP/12/257. International Monetary Fund.

Akgun

, Cournède

, & Fournier

(2017). The effects of the tax mix on inequality and growth . OECD Economics Department Working Papers, No. 1447. OECD Publishing. https://doi.org/10.1787/c57eaa14-en

Alves

, & Afonso

(2019). Tax structure for consumption and income inequality: An empirical assessment. SERIEs , 10, 337–364. https://doi.org/10.1007/s13209-019-00202-3

Blasco

, Guillaud

, & Zemmour

(2023). The inequality impact of consumption taxes: An international comparison. Journal of Public Economics , 222(9), 104897. https://doi.org/10.1016/j.jpubeco.2023.104897

Boadway

, Marchand

, & Pestieau

(1994). Towards a theory of the direct-indirect tax mix. Journal of Public Economics , 55(1), 71–88.

De Freitas

(2012). Inequality, the politics of redistribution and the tax mix. Public Choice , 151(3/4), 611–630.

Freebairn

(1991). Some Effects of a consumption tax on the level and composition of Australian saving and investment. The Australian Economic Review , 24(4), 13–29.

Iosifidi

, & Mylonidis

(2017). Relative effective taxation and income inequality: Evidence from OECD countries. Journal of European Social Policy , 27(1), 57–76.

Maina

A. W.

(2017). The effect of consumption taxes on poverty and income inequality in Kenya. International Journal of Accounting and Taxation , 5(2), 56–82.

10.

Marrero

G. A.

(2010). Tax-mix, public spending composition and growth. Journal of Economics , 99(1), 29–51.

11.

Mukherjee

(2022). Revenue assessment of goods and services tax (GST) in India. NIPFP Working Paper No. 385. NIPFP.

12.

Mukherjee

(2023). Revenue shortfall and GST compensation: An assessment. Economic and Political Weekly , 58(9), 40–46.

13.

Mukherjee

, & Rao

R. K.

(2015). Policy options for including petroleum, natural gas and electricity in the goods and services tax. Economic and Political Weekly , 50(9), 98–107.

14.

Neog

, & Gaur

A. K.

(2020). Tax structure and economic growth: A study of selected Indian states. Economic Structures , 9(38). https://doi.org/10.1186/s40008-020-00215-3

15.

Schechtl

(2022). Taking from the disadvantaged? Consumption tax induced poverty across household types in eleven OECD countries. Social Policy and Society , 23(2), 1–15. https://doi.org/10.1017/S1474746422000203

Do Taxes on Commodities and Services Bear a Disproportionate Burden in India? An Assessment from 2011–2012 to 2022–2023

Abstract

Keywords

Get full access to this article

References