GST stands for Goods and Services Tax. It’s an indirect tax that’s meant to replace a number of other indirect taxes in India, including excise duty, value-added tax, services tax, and so on. On 29 March 2017, the Parliament enacted the Goods and Service Tax Act, which took effect on 1 July of the same year. Various states of India contribute to GST Collections through various means. This article presents the state wise collection GST other than imports. We will also highlight a few observations regarding state wise collection of GST.
Contribution of Five States equals to the 50% of GST Collection
Fifty percent of the country’s overall GST collection comes from the five states (Maharashtra, Gujarat, Karnataka, Tamil Nadu, and Uttar Pradesh).
75% Contribution to GST Collections from 10 States
75% of the GST collected by the country comes from 10 states (These 10 states are Maharashtra, Gujarat, Karnataka, Tamil Nadu, Uttar Pradesh, Haryana, West Bengal, Delhi, Telangana, and Odisha).
Since GST is a consumption tax, the fact that the residents of those 10 states consume more means that GST revenue in those states would be particularly significant. Nevertheless, there are always more considerations to take into account. Further, the increased revenues of these states are not due solely to higher levels of consumption. Many factors might be at play here.
Why have 10 States contributed more to GST Collections?
As per the experts, the following are the reasons for more contribution from 10 states:
- There are more businesses and other organizations in these 10 states, which means more tax revenue is being generated and hence more GST is being collected. Those states have been home to several multinational corporations for decades, drawing workers from all across the country.
- High levels of employment (and hence income) in a state translate to greater consumer spending because of the higher standard of living enjoyed by its residents. The greater revenues in these 10 states are indicative of higher “per capita” earnings, as higher incomes lead to higher levels of consumption, which in turn generates more tax revenue.
- High consumption and resulting GST income may be traced back to the state’s economic status as well.
- Policy initiatives at the state level encouraging new business creation and job creation among residents of those states.
In Conclusion, These 10 states spend more on infrastructure, healthcare, education, and social services because they receive more in GST income. As an added bonus, it also appears to be more business-friendly.
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