GST and beyond: unveiling the drivers of state-level indirect tax revenue in India

Purpose This study investigates the impact of key determinants such as sectoral economic composition, government expenditure, implementation of the Goods and Services Tax (GST) and fiscal transfers from the central government on indirect tax revenue in Indian states. Design/methodology/approach The analysis employs a static panel data methodology and Generalized Least Squares (GLS) estimation to address heteroskedasticity and autocorrelation using a balanced panel dataset of 27 states. The timeframe for the research is considered from 2012–2013 to 2022–2023, capturing both the pre- and post-GST period. Findings The results indicate that sectoral composition, government expenditure and GST implementation are positively associated with indirect tax revenue, whereas greater fiscal reliance on central transfers is negatively associated with indirect tax generation. Research limitations/implications The study highlights the requirement for a diversified economic base, strategic public investment and fiscal autonomy at the state level. The findings offer policy recommendations that serve as a roadmap for enhancing sub-national tax performance and strengthening India's fiscal federalism. Originality/value This research provides new empirical evidence on the post-GST indirect tax regime in India and contributes to the literature on state-level fiscal dynamics and tax policy effectiveness.