Motor vehicles are Keralam’s biggest GST revenue generators, gold accounts for the highest business turnover, while hotels and restaurants contribute relatively little despite the importance of tourism to the state’s economy.
An analysis of actual GST collections from 11 major sectors during the first six months of financial year 2026-27 reveals the contrasting contributions of different businesses and raises questions about whether the state is adequately tapping the tax potential of some of its major economic activities.
The 11 sectors together generated ₹19,583 crore in GST revenue between April and Sept, a year-on-year growth of 18.8 per cent. Motor vehicles and auto spares topped the list, contributing ₹3,840 crore, or 19.6 per cent of the total. The sector recorded a turnover of ₹18,500 crore during the period.
Works contract services, covering civil and infrastructure projects, came second with a GST contribution of ₹2,660 crore, or 13.6 per cent of the total. Other trade, manufacturing and services contributed ₹2,593 crore (13.2 per cent), followed by white goods and electronics at ₹2,430 crore (12.4 per cent). Banking, financial and insurance services generated ₹2,120 crore, or 10.8 per cent.
Together, these five of the 11 sectors accounted for nearly 70 per cent of the GST revenue.
The gold sector presents a striking contrast. Gold, bullion and jewellery recorded a turnover of ₹32,500 crore during the six months, the highest among the sectors analysed. Yet, its GST contribution was only ₹1,000 crore, accounting for 5.1 per cent of the total. The relatively low contribution, partly because gold attracts a GST rate of 3 per cent, raises questions about the state’s tax potential in a sector with such enormous business volumes.
Hotels, restaurants and outdoor catering recorded a turnover of ₹10,100 crore during the period but contributed only ₹770 crore (3.9 per cent) in GST. This is despite tourism and hospitality being important components of Keralam’s economy.
“The challenge is not just to increase collections from sectors already contributing well, but to ensure that the enormous business turnover in sectors like gold and tourism is adequately reflected in tax revenue. We need to move beyond routine returns scrutiny and use data analytics to identify under-reporting, mismatches and potential revenue leakages,” said GST sources.
The department has identified specific areas for closer scrutiny. In the gold trade, it plans to examine discrepancies between stock records, e-way bills and tax returns, besides transactions involving job work. Hotels and restaurants will be examined for possible under-reporting of cash sales, cloud kitchens and transactions through online food delivery platforms.
It plans to use information from different tax returns and records of goods movement to identify businesses that under-report sales, claim excess input tax credit or stop filing returns.
Also, telecom, IT and professional services contributed ₹1,540 crore, while electrical equipment and cables generated ₹1,000 crore. Pharmaceuticals and medical formulations contributed ₹900 crore, while readymade garments and textiles generated ₹730 crore.
Source from: https://auto.economictimes.indiatimes.com/news/industry/motor-vehicles-and-auto-spares-lead-keralam-gst-collections-with-3840-crore-contribution/135675134
