| Summary: | AbstractThis study focuses on the crucial task of forecasting tax revenue for India, specifically the Goods and Services Tax (GST), which plays a pivotal role in fiscal spending and taxation policymaking. Practically, the GST time series datasets exhibit linear and non-linear fluctuations due to the dynamic economic environment, changes in tax rates and tax base, and tax non-compliance, posing challenges for accurate forecasting. Traditional time-series forecasting methods like ARIMA, assuming linearity, often yield inaccurate results. To address this, we explore alternative forecasting models, including Trigonometric Seasonality Box-Cox Transformation ARIMA errors Trend Seasonal components (TBATS) and Neural Networks: Artificial Neural Networks (ANN), Neural Networks for Autoregression (NNAR), which capture both linear and non-linear relationships. First, we test single time series models like Exponential Smoothing (ETS), TBATS, ANN, and NNAR. Second, we also test hybrid models combining linear models, non-linear models, and neural network models. The findings reveal that the Hybrid Theta-TBATS model offers superior forecasting accuracy, challenging recent research favouring neural network models. The study highlights the effectiveness of advanced non-linear models, particularly TBATS and its hybridisations with linear models, in GST revenue forecasting. Our study also found that the single TBATS is the second-best model, which offers better forecasting accuracy. These insights have significant implications for policymakers and researchers in taxation and fiscal planning, emphasising the need to incorporate non-linear dynamics and advanced modelling techniques to enhance the accuracy of GST revenue forecasts.
|
|---|