The Goods and Services Tax (GST) has improved tax buoyancy, which has increased to 1.22 and thus has also improved the revenue for states despite the end of the five-year compensation period, Finance Minister Nirmala Sitharaman said on May 6.

“GST has improved tax buoyancy from 0.72 (pre-GST) to 1.22 (2018-23). Despite compensation ending, state revenues remain buoyant at 1.15,” Sitharaman stated on microblogging site X.

It is a myth that all GST collections are pocketed by the Centre as GST contributes significantly to state revenues, she said.

States receive 100 percent of SGST collected in that state and approximately 50 percent of IGST (i.e. on inter-state trade). A significant portion of Central GST, i.e., 42 percent, is devolved to the states based on the Finance Commission's recommendations.