Goods and Services Tax and State Revenue: Case Study of Uttar Pradesh

One of the problems in the introduction of GST relates to loss of revenue to the States, given the base and the rates of the tax. In the context of two different structures suggested by the Empowered Committee of State Finance Ministers and the Central Government, this paper is an exercise in different methodologies for estimating probable loss of revenue to the States. Three different approaches, viz., revenue approach, turnover approach and consumption approach, are adopted with finer details to estimate the revenue from GST. The projected revenue is presented for Uttar Pradesh for the period of award of the Thirteenth Finance Commission, i.e., 2010-2011 to 2014- 2015.