Since implementation, the Goods and Services Tax appears to have reduced the resource-generating capacity of States and has contributed to worsening inter-State inequalityTwo years after its implementation, the extent to which the Goods and Services Tax (GST) regime is an improvement upon the earlier system of multiple excise and sales taxes remains unclear. As of now, there are several worrying trends. The first is thatgross GST collections are short of expectations. Thus, as against a target of IR/s 1,12,000 crore a month set for 2018-19, average GST revenues fell short of lakh crore a month in that year.The shortfall is a problem especially for the States, because while they have given up a significant part of the taxation powers they had earlier, they will be compensated only for five years (using revenues from a special cess) for any shortfall in revenues relative to a projected revenue growth target of 14 per cent per annum.
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