India's GST collections are below potential: IMF team

India's GST collections are below potential: IMF team

Multiple rates, exemptions and implementation challenges are affecting goods and services tax (GST) collections in India, an analysis by an International Monetary Fund (IMF) team has said.

The study of India’s resource mobilisation for next five years has estimated that in 2018-19, GST collections were 5.8% of GDP, which was better than some of the comparable developing countries, but far below the potential of 8.2% of GDP, indicating that the efficiency gains from the new regime have not fully accrued.

“The IMF team has estimated that the compliance gap may be of the order of 40%,” a government official told TOI. The team included Ruud de Mooij, Arbind Modi, Li Liu, Dinar Prihardini, and Juan Carlos Benitez.

While it blamed multiple factors for the divergence between actual collections and potential revenue, the assessment flagged exemptions such as those on food articles as an area of concern.