Making sense of the GST bonanza

October data validates the government's trust in positive consumer response to rate cuts. But GST revenues are determined by more than one variable

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When the GST Council announced a rate rationalisation of the indirect tax regime — it was effectively a reduction in the tax burden on most things — it also embraced an opposing dialectic visa-vis revenue collections.

On the one hand were the headwinds which would bring down GST collections for the similar amount of spends on goods and services, and on the other, was an expectation that consumers would respond to lower tax rates, in effect lower prices, and buy more, leading toa higher tax collection despite lower tax rates. The government putits faith in the latter.