The Role of Digital Economy in Enhancing Goods and Services Tax Collection: Evidence in India

Abstract India’s digitalisation has profoundly reshaped its tax administration outline, mainly under the Goods and Services Tax (GST) regime. This paper explores the role of digital economy in strengthening India’s Goods and Services Tax (GST) collection by using vital variables such as Unified Payments Interface (UPI) transaction volume which indicate broadening of the digital financial ecosystem, and Unified Payments Interface (UPI) transaction value, which demonstrate confidence on the digital means for high value transactions. E-way bill generation, which shows efficiency and formalization of logistics and supply chains and GSTR-1 and GSTR-3B filings, signifies compliance levels among taxpayers. By leveraging descriptive statistics techniques and trend analysis methods for the eight years period from 2017–18 to 2024–25, the analysis demonstrates that a notable upward trend in digital payments and compliance activities of taxation, which has amplified transparency and condensed tax evasion, which has paved the way for better efficiency in revenue mobilization. The study elucidates that UPI have widened the formal financial ecosystem, whilst on the compliance side e-way bills and GST return filings have boosted accountability in supply chains and reporting. Ultimately, the study demonstrates that digitalization has emerged as a crucial driver for accelerating GST revenue performance safeguarding long-term financial constancy in India. Thus, through digitalisation tax collection can be enhanced to a large extent.