The present study empirically examines the combined impact of India’s Goods and Services Tax (GST) Council’s digital compliance tools and revenue buoyancy reforms post-GST implementation. India has introduced several rounds of digital compliance reforms since July 2017 when GST came into force, viz., Goods and Services Tax Network, electronic invoicing, e-way bills and automated matching of returns. Using the revenue buoyancy approach, with monthly tax revenues collected between 2017 and 2024, this study examines whether these digital reforms have improved taxpayer compliance, resulting in higher revenues compared to gross domestic product (GDP) growth. The study reveals that GST revenue buoyancy increased from 0.9 immediately following GST implementation to 1.3 at the completion stage of digital reforms. The findings suggest a rise in tax revenues exceeding GDP growth rates. However, considerable risks attend the adoption of digital compliance reforms.. In this regard, while acknowledging the utility of digital compliance reforms as a policy instrument, the study recommends that such measures must be carefully calibrated, keeping in view the potential hazards associated with the digital divide amongst smaller taxpayers. To mitigate the risks, India may adopt a dual-track compliance process combining manual and digital means of compliance until full digital inclusion can be ensured. The paper adds valuable insights to the taxation literature on emerging economies undertaking similar digital tax compliance reforms.
Palak Jagtiani (Fri,) studied this question.