Where does your GST rupee go?

Step 1 of 7How much GST there is

Every time you buy a phone, a bus ticket or a plate of biryani, part of the price is GST, the Goods and Services Tax. In 2023-24 GST added up to ₹18.40 lakh crore Set by balancing, which is 6.3% of GDP Set by balancing.

This is GST as the national accounts count it. It is net: the tax that businesses pay on their inputs and claim back as a credit is not counted twice. And it is counted after settlement: integrated GST (IGST), charged on sales from one State to another, has already been shared out between the Centre and the States, so there is no separate IGST pot in these accounts.

On the map, GST is part of the flow from goods and services to taxes: whoever buys a product pays its tax along with the price.

Step 2 of 7CGST, SGST and the cess

GST comes in three parts. Of every hundred rupees of GST, ₹46.9 Set by balancing is Central GST (CGST), ₹45.1 Set by balancing is State GST (SGST) and ₹8.1 Set by balancing is the GST compensation cess, an extra levy on a short list of goods such as cars, tobacco, coal and fizzy drinks.

CGST here includes Union Territory GST (UTGST), collected in Union Territories that have no legislature of their own; it belongs to the Centre.

A caution about the level of CGST and the cess. When the accounts were balanced so that every row and column adds up, both were set at the upper edge of the tolerance band allowed around the cash collections. The width of that band is a judgement, not a published figure, so read these two levels with care. "How these figures were made", below, flags them.

Step 3 of 7Which purchases carry the most GST

Some purchases carry far more GST than others. Construction carries the most: ₹3.24 lakh crore Set by balancing, or ₹17.6 Set by balancing of every hundred rupees of GST. Next come vehicles and other transport equipment (₹9.6 Estimated), chemicals, rubber and plastics (₹7.5 Estimated), and textiles and clothing (₹7.4 Estimated).

Construction is high because the GST on new buildings, roads and other works mostly stays where it lands. Households and governments are final buyers and cannot claim it back, and the GST law blocks most credit on buildings even for businesses.

How each tax splits across products is estimated from the supply and use tables, so these shares carry an "estimated" label. Construction is the exception: balancing moved its GST noticeably, so its share is labelled "set by balancing". The direction of that move is explained; its size is not yet.

Step 4 of 7Who pays it at the till

Who actually hands over the money? Households buying things for their own use pay the largest share: ₹9.85 lakh crore Estimated, or ₹53.5 Estimated of every hundred rupees of GST.

Spending on investment (new homes, offices, roads and machines) carries about a fifth. So does intermediate use, the things firms buy to make other things. Because GST is counted net, the intermediate-use share is only the GST that firms paid on inputs and could not claim back, for example because what they sell is exempt from GST. Exports carry no GST at all: they are zero-rated.

That is why the household share is the economically final part of GST: it is the tax that stays with the person who consumes the product.

These shares are estimates. They come from the supply and use table's split of each tax by type of buyer, made before the accounts were balanced, and are then scaled to the balanced totals of CGST, SGST and the cess.

Step 5 of 7Where the money is booked

In the accounts, CGST and the cess are paid to the Centre and SGST to the States. On this first count the Centre receives ₹10.11 lakh crore Set by balancing (₹54.9 Set by balancing of every hundred rupees) and the States ₹8.29 lakh crore Set by balancing (₹45.1 Set by balancing).

That is not where the money stays. The next step follows what the Centre passes on.

Step 6 of 7What the Centre passes on to the States

Two kinds of flow carry GST money from the Centre to the States.

The cess. The cess was created to compensate the States for any shortfall in their tax revenue in the first years of GST. In 2023-24 the Centre paid the States ₹44,946 crore Official as compensation grants. It also passed on ₹78,104 crore Derived of cess so that the States could repay the back-to-back loans the Centre had raised for them in the pandemic years, when cess collections fell short. The States' loans fell by the same amount: −₹78,104 crore Derived (negative, because debt was repaid). Together the two transfers equal ₹82.9 Derived total of every hundred rupees of cess collected that year. They need not match exactly, because a year's grants can settle claims from earlier years.

Tax devolution. The Finance Commission sets the share of the Centre's taxes that goes to the States. In 2023-24 the States received ₹3.43 lakh crore Official of CGST this way: ₹40.0 Official of every hundred rupees of CGST, leaving out UTGST, which is not shared. A year's devolution also carries adjustments for earlier years.

Counting what the States keep to spend (SGST, devolved CGST and the compensation grants), ₹66.1 Set by balancing of every hundred rupees of GST ended up with the States. Another ₹4.2 Derived was paid to them only to repay the back-to-back loans, so it passed straight through and did not stay with them.

Step 7 of 7What governments spend on

Money is fungible. Once GST reaches a treasury it is pooled with income tax, borrowing and everything else, so no rupee of GST can be traced to a particular school or road. What the accounts can show is what the Centre and the States together spend on.

Their combined outlays came to ₹71.40 lakh crore Set by balancing. That counts each rupee once: money the Centre passes to the States is left out, so it is not counted twice. Per hundred rupees of outlays:

Running public services is the biggest item: the pay of teachers, police, nurses and clerks, the food grain the Centre hands out through the public distribution system, and other purchases. Interest on past borrowing comes second, ahead of all spending on investment.

Two things are outside this hundred. Governments also bought financial assets, such as shares in public companies, loans and deposits: ₹5.91 lakh crore Set by balancing net. And subsidies are left out. In this map, as in the supply and use tables it is built on, subsidies are booked as negative taxes in the tax accounts: −₹5.76 lakh crore Official total · split set by balancing on products such as fertiliser, and −₹3.42 lakh crore Set by balancing paid to producers. So they are not among the government outlays counted here. In the government's own accounts, and in the national accounts' measure of government spending, subsidies are spending: adding them back would raise outlays by ₹12.9 Set by balancing for every hundred rupees counted here, and every share above would be a little smaller.