IGST tax woes worsening in Kerala, says public expenditure report

THIRUVANANTHAPURAM: Amidst grappling with a crippling economy, the state’s IGST tax loss will be more than 25,000 crores, predicted the Public Expenditure Review report. It is estimated that there has been a loss of around 35,000 crore rupees since the implementation of GST in 2017. This is more than the loan taken by the state in a year. The report was submitted to the Assembly on Thursday.

Products worth 1.5 lakh crore reach Kerala every year and 80% of this are sold directly. Only 20% are value-added products. Currently, Kerala only gets tax on value-added products. It is reported that 5000 crores are lost annually in IGST levied on inter-state trade. Being a consumer state, Kerala should have benefited greatly from GST but the contrary happened.

Tax on products sold in Kerala will be paid in the respective states. The central government will get their share of benefits from the IGST. Due to anomalies in the return form, the consumer states do not get the correct IGST allocation. There is no provision to ensure tax allocation to consumer states.

The Finance Commission has recommended that the loan should be less than 25% of the Gross Domestic Product. Kerala's debt has been outside this mark since 2011, which is 28% by 2019. While debt is increasing by 14.53% annually, production is increasing by only 9.26%.

The report also demands a need to switch to low-rate loans.