❌ Why Full GST Revenue Return to States Is NOT Possible (India)🏛️ GST System Reality

GST is a shared tax, but revenue return depends on actual collection, not guaranteed promises.—

🔴 Key Reasons Explained Simply

1️⃣ GST Compensation Ended Earlier: States were guaranteed 14% revenue growth Now: No legal guarantee → shortfalls remain unpaid—

2️⃣ Compensation Cess Reduced / Removed

Luxury & sin-tax cess funded state compensation Cess mostly ended

→ no dedicated fund for states—

3️⃣ Limited GST Collection Pool

GST depends on: Business activity

Consumer spending

Economic slowdown = less tax to share—

4️⃣ IGST Settlement Delays

Inter-state GST collected by Centre first

Return to states happens after reconciliation

Leads to delays & mismatches—

5️⃣ High Central Government Expenses

GST revenue also funds:

Defence & security

National highways & railways Welfare schemes

Interest on past GST loans

➡️ Less cash available for states—

6️⃣ States Lost Old Tax Powers

VAT, entry tax, octroi removed GST underperformance = no backup tax option—

7️⃣ Fiscal Deficit & Borrowing Limits

Centre cannot borrow endlessly Excess borrowing risks:

Inflation

Credit rating downgrade—

8️⃣ Tax Evasion & Compliance Gaps Fake invoices

Non-filing of returns

Under-reporting of sales

➡️ Shrinks total GST revenue—⚠️ Final Infographic Conclusion. Full GST revenue return to states is not possible because compensation ended, collections are limited, central obligations are high, and GST depends on real economic performance—not promises.–