Future of GST administration in India: Analysis for Key States

In September 2021, the Government of India confirmed ceasing GST compensation to states in June 2022. Assuming no rollback of this clause, it is imperative that State Governments find ways to optimise their revenue in the coming months. Optimal tax policy design and simpler tax administration help balance the trade-offs in achieving key objectives of the GST regime. This means generating higher revenues whilst reducing compliance burden for businesses and maximising socio-economic benefits for all. It is therefore essential to measure and analyse potential GST losses at the State level and its impact on the State’s public finances post-2022. This second phase is also an opportunity to further strengthen and modernize overall tax administration and leverage global best practices to help establish effective and targeted countermeasures to bridge revenue shortfalls, boost voluntary compliance by taxpayers and plug gaps such as tax evasion and fraudulent practices.