· Kerala is estimating an annual revenue loss of Rs. 2,500 crore from four sectors due to new Goods and Services Tax rates.
· State Finance Minister Balagopal has asked the Central government to provide compensation to the states, to ensure welfare initiatives can continue.
· The GST reform decision was passed unanimously with no disagreements from states.
Kerala’s State Finance Minister K N Balagopal said on Thursday that Kerala is expected to see an annual revenue loss of Rs. 8000 crore to Rs. 10,000 crore due to the new Goods and Services Tax (GST) rate cuts.
The GST Council on Wednesday approved a two-rate structure from the current four slabs, a decision taken unanimously with no disagreements from any state. Personal-use items and aspirational middle-class commodities such as AC and washing machines will see rate cuts, while individual life and health insurance premiums have also been exempted. Revenue Secretary Arvind Shrivastava said that the financial implications of the rate rationalisation would be Rs. 48,000 crore which is “fiscally sustainable for Centre and State.”
According to Balagopal, there will be an estimated annual revenue loss of Rs. 2,500 crore from four sectors – cement, electronics, auto and insurance. He highlighted that while the state supports the GST rate cuts, the Central government should take steps to ensure compensation is provided to the states and rate cut benefits are passed onto the common people, as welfare initiatives will get hit by the reforms. He also said that the issue was not taken seriously during the GST Council meeting.
Kerala Chief Minister Pinarayi Vijayan had earlier sought the intervention of Prime Minister Narendra Modi to address broader concerns from the states regarding revenue losses expected to rise from the revised tax structure, with Balagopal warning these reforms could have “worst impact on public finances since Independence”, reported India Today.
(with inputs from PTI)
