Impact of Goods and Services Tax (GST) On Economic Development in India

Abstract

The Goods and Services Tax (GST) is a key tax reform in India's economic history that aims to streamline indirect taxation and foster economic growth and development. Since its implementation in 2017, GST has had far-reaching implications for various facets of the economy. This study endeavours to aid the existing literature by offering insights into the multifaceted impact of GST on economic development in India. By analysing the changes in GSDP post-GST implementation, this study aims to assess the direct impact of GST on state-level economic activity.  By employing panel regression analysis and evaluating different models, including constant effect, fixed effect, and random effect models, the study gives analyses the impact of GST on economic growth covering the years 2017 to 2023.  This study sheds light on the intricate relationship between GST revenue and economic development, as measured by GSDP across various states in India. The findings consistently demonstrate a significant positive relationship between GST revenue and GSDP, indicating that higher GST revenue is associated with increased economic output at the state level.  By examining changes in GSDP following GST implementation, provides policymakers, researchers, and stakeholders with valuable information for informed decision-making and policy formulation aimed at promoting inclusive and sustainable development across Indian states.