Goods and Services Tax efficiency across Indian States: panel stochastic frontier analysis

Abstract

In public finance, estimation of tax potential of a government -either federal or provincial -has immense importance to understand future streams of tax revenue. Tax potential depends on tax capacity and tax effort (TE) and therefore joint estimation of both the functions is desirable. There are several frameworks to estimate tax capacity and tax efficiency (tax effort); in the present paper time variant truncated panel Stochastic Frontier Approach (SFA) is adopted to estimate the functions jointly for the period 2012-13 to 2019-20. The findings of the study could be useful for policy and especially for the sitting Fifteen Finance Commission. The results of the study show that GST capacity of states depends on size and structural composition of the economy. Introduction of GST has reduced states' GST capacity and the impact is restricted to scale only. The study has used data from GST Network (GSTN) database for the post-GST period and given all other factors at their levels, GSTN data shows lower GST capacity for high income states and higher capacity for low income states. The relationship between per capita income (PCI) of states and tax efficiency is non-linear and as PCI rises TE falls and thereafter it rises. Minor states (special category states and UTs with legislative assembly) have lower tax efficiency. Delhi and Goa have the highest GST gap and on average major states could increase their GST collection by 0.52 percent of GSVA and minor states by 1.15 percent if they increase their tax efforts.

Capital Structure of Property Sector in Malaysia

“…After filtering out companies with missing information, the final data set consists of 43 companies listed in Bursa Malaysia during the period from 2002 to 2011. In order to analyse the data, the study applies the Stochastic Frontier Analysis (SFA) (Mukherjee, 2020). SFA is the estimation tool to estimate the frontier function and to measure the production efficiency of the firms.…”

Impact of GST on motor and pump exports in India

“…The pre-designed and pre-tested questionnaire is used for the collection of primary data (refer to Appendix Table A1). We tested the pre-designed questionnaire on 35 exporters where we asked their opinion on drawback rates (Thowseaf & Millath, 2016;Revathi et al, 2019), long-run performance (Deshmukh, 2022), harmonization (Tiwari & Singh, 2018;Mukherjee, 2020), logistics cost (Deswal, 2019;Ojha & Vrat, 2018), IGST (Kumar, 2018), filing process, technical complications (Rao, 2019), transaction cost (Khoja & Khan, 2020), etc. In the later stage (main data collection), we added a few more variables based on the suggestions from motor and pump exporters and an extensive literature review.…”

Impact of Goods and Services Tax on Indirect Tax Revenue of India: With Special Reference to Odisha State

“…In the words of Mukherjee [12] viewed that the triumph of GST, in terms of compliance and mustering of revenue, is dependent on simplified tax administration process and incentivising transactions with tax invoices. In another study, Mukherjee [13] concluded that while the removal of GST compensation cess (GSTCC) will benefit some states, others might not be that beneficial. If the GST compensation is terminated in 2022 then the government needs an appropriate framework for strengthening various aspects of GST.…”