Asian Journal of Research in Banking and Finance
Year : 2017, Volume : 7, Issue : 6
First page : ( 259) Last page : ( 273)
Online ISSN : 2249-7323.
Article DOI : 10.5958/2249-7323.2017.00063.3

The revenue impact of VAT implementation in Rajasthan

Dr. Singh Ummed

Assistant Professor, Department of Economics, University of Rajasthan, Jaipur, India. drummedsinghuniraj@gmail.com

Online published on 22 June, 2017.

Abstract

To assess the impact of value added tax (VAT) on state revenue performance, the tax buoyancy co-efficient and co-efficient of variation (C.V.) have been calculated for both the pre and post VAT periods. An annual data set for the period of 1994–95 to 2016–17 and double log regression model have been used to calculate buoyancy coefficient. The estimates of the tax buoyancy coefficients are found to be positively significant and more than unity implying that the ratio of VAT revenue to net state domestic product (NSDP) is increasing with the growth of the economy. The findings of analysis suggest that in the post VAT period, variability in VAT revenue collections in Rajasthan has slightly increased while the VAT buoyancy coefficient is marginally less than that of the Pre-VAT period. But it is greater than one hence; VAT is buoyant source of revenue for the state. The study concludes that revenue performance of VAT in Rajasthan has been encouraging so far and in case of broadening the base of tax revenue, the VAT has resulted in some amount of success.

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Keywords

Tax Buoyancy, Tax efforts, Fiscal performance, Elasticity of Tax Revenue, Co-efficient of Variation and Value Added Tax (VAT).

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