Finance minister K N Balagopal said on Friday that the reduction in GST tariff rates would seriously hurt the state’s revenue in the coming days. Balagopal explained that the current GST rates reflect the impact of the US tariff hike, which also affected the finances of most states. The minister also added that only big corporates, not ordinary people, would benefit from the structural changes in GST.
He inaugurated a roundtable conference on the ‘Impact of US Penal Tariff with a Special Focus on Kerala’ organized by Gulati Institute of Finance and Taxation. The country’s GST revenue, roughly Rs 22 lakh crore annually, is expected to drop by Rs 4 lakh crore (approx) and this in turn would heavily impact Kerala’s finances.
“According to a rough estimate by state’s GST department, Kerala could lose Rs 8,000 crore in GST revenue. We may lose Rs 5,000 crore in this financial year. Kerala will face tough times in the coming months,” he said.
A major chunk of the trade in Kerala falls under the 18–28% GST tariff bracket so the latest GST cuts will reduce the govt’s revenue especially in the automobile and insurance sectors. “The automobile sector alone may cause a revenue loss of Rs 1,100 crore and the insurance sector Rs 500 crore,” he added.
He urged the Centre to start a compensation package for all states similar to the one introduced in 2017 when GST was launched. He said revenue losses would hit states like Kerala hard since they spend much of their revenue on welfare programmes.
“Consumers are not benefiting from the reduction in GST rates, according to a study conducted by GST department on 25 selected products. Big corporates are the major earners of GST rate cuts,” he added.
He also warned that the US tariff hike would hurt sectors like marine products, spices, tea, coffee and coir. Kerala exports 12% of India’s total exports worth Rs 7,000 crore. He called on the Centre to support the domestic market and announce aid packages for labor-intensive export sectors such as marine products.
Source #TOI
