'GST revenue to outpace GDP growth till high compliance'

Goods and Services Tax (GST) revenue collection of central and state governments will continue to grow at a faster pace than nominal GDP growth rate till very high tax compliance level is achieved, after which, the tax on consumption will grow in sync with the rate of economic expansion, Central Board of Indirect Taxes & Customs (CBIC) chairman Sanjay Kumar Agarwal said in an interview.

Agarwal said that the nominal GDP rate will be dictating growth in GST revenue although presently there is a tax buoyancy above 1, which indicates compliance level is going up. A host of measures taken to improve the efficiency of GST will ensure that there will be a huge jump in voluntary compliance by tax payers and that chances of or propensity to evade taxes will be less, he said.

"So in times to come, this buoyancy in GST revenue collection will continue, but slowly, when the compliance level will be very high, then the buoyancy will not be that high. Let's hope our GDP growth will be very robust and accordingly GST revenue collections will also happen," said Agarwal.

Tax buoyancy refers to the responsiveness of tax revenue to changes in economic activity and is a barometer of how well the tax system is able to mobilise additional revenue.