Journal Press India^®

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The implementation of the Goods and Services Tax (GST) in India in 2017 aimed to create a unified national market. This study analyses GST’s structural buoyancy relative to Gross Domestic Product (GDP) and Private Final Consumption Expenditure (PFCE) using quarterly data from Q2 2017-18 to Q2 2025-26. Applying an Ordinary Least Squares (OLS) framework for tax buoyancy estimation and a Vector Autoregression (VAR) model for lead-lag relationships, the results show a robust GDP buoyancy of 1.26 and a consumption buoyancy of 1.19, indicating effective tax revenue growth. Granger Causality tests reveal that GDP and PFCE predict GST collections (p < 0.001), whereas GST does not significantly influence future economic growth. An iterative 6-quarter forecast indicates continued revenue momentum, providing essential recommendations for policymakers regarding the stability and sustainability of India’s indirect tax system.

Keywords

GST buoyancy; Vector Autoregression (VAR); Tax elasticity; Private final consumption expenditure

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