From Fragmentation to Unification : The GST Impact on India’s State Indirect Tax Revenue Using Dynamic Panel Analysis

Authors

  •   Khushboo Jain Research Scholar (Corresponding Author), Haryana School of Business, Guru Jambheshwar University of Science and Technology, Hisar - 125 001, Haryana. & Assistant Professor, School of Management Studies, CGC University, Mohali - 140 307, Punjab ORCID logo https://orcid.org/0000-0001-7773-9725
  •   Shveta Singh Professor, Haryana School of Business, Guru Jambheshwar University of Science and Technology, Hisar - 125 001, Haryana ORCID logo https://orcid.org/0000-0003-1491-6135

DOI:

https://doi.org/10.17010/pijom/2026/v19i6/174707

Keywords:

goods and services tax, system-generalized method of moments (GMM), COVID-19, Indian states, indirect tax revenue, sectoral composition, fiscal federalism.
JEL Classification Codes :C33, H71, H72, K34, O13, O14
Publication Chronology: Paper Submission Date : August 25, 2025 ; Paper sent back for Revision : May 13, 2026 ; Paper Acceptance Date : May 26, 2026 ; Paper Published Online : June 15, 2026.

Abstract

Purpose : This research examined the influence of Goods and Services Tax (GST), sectoral composition, government expenditure, fiscal transfers, and the COVID-19 recovery period on indirect tax revenue across Indian states.

Design/Methodology/Approach : The research employed a quantitative panel-data approach. Annual data from 27 Indian states were collected from 2012–2013 to 2022–2023. The outcomes were drawn from the application of the system generalized method of moments (GMM) approach to a dynamic panel model.

Findings : The results revealed that the agricultural sector, manufacturing sector, service sector, development expenditures, GST implementation, and the COVID-19 recovery period positively influenced indirect tax revenue but were negatively influenced by fiscal transfers. Furthermore, a positive association was observed between the lag and current indirect tax revenue levels.

Practical Implications : The findings suggested that policymakers should strengthen GST compliance mechanisms, promote formalization, incentivize productive expenditure, and reduce excessive dependence on central transfers to improve tax mobilization capacity across states.

Originality/Value : This research is among the first to jointly examine the effects of the GST, sectoral composition, government expenditure, fiscal transfer, and the COVID-19 recovery period on indirect tax revenue at the Indian state level using a dynamic panel approach.

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Published

2026-06-15

How to Cite

Jain, K., & Singh, S. (2026). From Fragmentation to Unification : The GST Impact on India’s State Indirect Tax Revenue Using Dynamic Panel Analysis. Prabandhan: Indian Journal of Management, 19(6), 43–59. https://doi.org/10.17010/pijom/2026/v19i6/174707

Issue

Volume 19, Issue 6, June 2026

Section

Articles
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