An Assessment of the Efficiency of Indirect Tax Revenue Mobilisation by Indian States: A Comparative Analysis During <scp>VAT</scp> and <scp>GST</scp> Regimes

ABSTRACT Using a Stochastic Frontier Analysis (SFA) fixed effects model, this study evaluates the factors contributing to the efficiency of indirect tax revenue mobilisation incorporating the role of Information and Communication Technology (ICT) and tax administration quality, the dimensions which have remained unexplored for Indian states. The empirical findings demonstrate that while ICT use enhances revenue mobilisation efficiency in major states, it adversely affects the efficiency in minor states. Governance quality doesn't significantly contribute to improving revenue efficiency in either major or minor states. Although both tax regimes adversely affect revenue efficiency, the Goods and Services Tax (GST) regime ensures greater tax efficiency compared to the Value Added Tax (VAT) regime, as GST significantly improves efficiency in minor states relative to the VAT regime.