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Do Digital Payments Spur Gst Revenue: Indian Experience

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  • Surender Kumar

    (University of Delhi, India)

Abstract

This paper measures the effect of digital payments on enhancing Goods and Services Tax (GST) revenue in India using monthly time-series information on tax collections and digital payments. By employing an autoregressive distributed lag cointegration framework, we find that the GST elasticity concerning digital transactions is about 0.54. The implication is that a one-standard-deviation increase in the value of digital transactions spurs GST revenue of about INR 62 billion, and a one-standard-deviation increase in Index of Industrial Production (IIP) enhances GST revenue by about INR 8 to 12 billion. These results suggest that enhancing digital transactions is an effective way of increasing tax revenue.

Suggested Citation

  • Surender Kumar, 2024. "Do Digital Payments Spur Gst Revenue: Indian Experience," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 27(3), pages 459-482, July.
    • Handle: RePEc:idn:journl:v:27:y:2024:i:3d:p:459-482
    DOI: https://doi.org/10.59091/2460-9196.2279
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    References listed on IDEAS

    as
    1. Joel Slemrod, 2019. "Tax Compliance and Enforcement," Journal of Economic Literature, American Economic Association, vol. 57(4), pages 904-954, December.
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    More about this item

    Keywords

    Digital payments; GST revenue; Tax collections; India;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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