Kerala Finance Minister warns new GST slabs could cause significant revenue losses, impacting state welfare and development.
Thiruvananthapuram
Kerala Finance Minister K.N. Balagopal on Monday expressed concern over potential revenue losses for states following the implementation of the new Goods and Services Tax (GST) structure. While states, including Kerala, actively participated in the GST Council’s recent decision to simplify tax slabs, Balagopal warned that the reforms could significantly impact state finances.
The revised GST regime, effective Monday, now features only two tax slabs: 5% and 18%. Nearly 99% of goods are expected to fall under the lower 5% bracket, according to the Union government. Items such as milk products, ghee, butter, paneer, and ice cream have seen price reductions, with the Kerala Cooperative Milk Marketing Federation (Milma) revising prices. For instance, a litre of ghee is Rs 45 cheaper, and 400 grams of butter will cost Rs 15 less.
However, Balagopal cautioned that the benefits of tax cuts may not fully reach consumers, as many companies do not pass on savings. He estimated Kerala could face annual revenue losses ranging from Rs 50,000 crore to Rs 2 lakh crore, potentially affecting welfare pensions, salaries, and development projects. He emphasized that around 41% of state revenue comes from GST, leaving states vulnerable without alternative sources.
The Finance Department also clarified that while GST on lotteries has increased from 28% to 40%, ticket prices will remain unchanged, with adjustments made to prize distribution and agent commissions. The government will continue strict monitoring to ensure that reduced GST rates translate into actual consumer benefits in the market.
