A Team consisting of Mr. Ruud De Mooij, Division Chief, Mr. Arbind Modi, Senior Economist and Ms. Li Lui, Economist from the Tax Policy Division of the International Monetary Fund (IMF), Fiscal Affairs Department, gave a presentation to the 15th Finance Commission on “resource mobilization over the next five years”, today. Some members of the Finance Commission’s Economic Advisory Council also participated in the discussions, which was chaired by Sh. N.K. Singh, Chairman, Finance Commission.

The discussions were centered around options for improving the tax resources of the general government, with special focus on improving the revenue realization from the GST. It was presented that the current collections are significantly below an estimated revenue frontier for the country, arrived at using robust panel data analysis of comparator countries. It was further discussed that rationalization of the rate structure as well as improvements in compliance and collection efficiency of GST and other taxes can move India much closer to the frontier. Policy options to achieve this improvement were also discussed.

Tax resource mobilization: focus on GST rate rationalization and compliance to close the revenue gap. Presentation recommended strengthening resource mobilization by addressing the shortfall against an estimated revenue frontier, principally through GST rate rationalization and enhanced compliance and collection efficiency across GST and other taxes to move domestic revenues closer to benchmark levels.