Kerala to face Rs 8,000-10,000 cr annual revenue loss due to GST rate rationalisation: FM Balagopal
GST
Dated:- 4-9-2025
PTI
New Delhi, Sep 4 (PTI) Kerala is expected to face an annual revenue loss of Rs 8,000 crore to Rs 10,000 crore due to Goods and Services Tax (GST) rate cuts, state Finance Minister K N Balagopal said on Thursday.
His remarks come a day after the GST Council approved a two-rate structure 5 and 18 per cent a move that will bring down the prices of a large number of items. The revised structure will be in force from September 22.
Currently, there are four rate slabs 5, 12, 18 and 28 per cent.
At a media briefing in the national capital on Thursday, Balagopal, who is part of the ruling Left Democratic
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is a lack of clarity on the revenue impact on the state as well as the Union exchequer. For Kerala, he said the impact will be disproportionately severe compared to the national average as the state's consumption basket is heavily skewed towards higher rate items, the minister said.
Going by the past experiences, Balagopal said the rate rationalisation did not result in a commensurate reduction in consumer prices.
The financial implication of the rate rationalisation would be Rs 48,000 crore and this would be “fiscally sustainable for Centre and state”, Revenue Secretary Arvind Shrivastava said on Wednesday.
Premium paid for individual life insurance and health insurance (including family floater), policies, too, have been exempted f
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evenue share for states from the GST collection to 60 per cent.
Currently, the revenue-sharing ratio is 50:50 between the Centre and the states.
In his presentation to the GST Council, Balagopal mentioned that in November 2017, the rates of 178 items were reduced in a single stroke, which sharply lowered the average tax rate to 11.6 per cent and in the years that followed, several more rate reductions were effected, and with the current proposal, the average tax rate is expected to fall further.
“Despite assurances that GST would lead to economic buoyancy and increased consumption, thereby boosting revenues, such buoyancy has not materialised even after eight years of implementation,” he claimed.
On Wednesday, Union Finance Minister
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