GST reforms proposal: Opposition states demand compensation; Kerala fears losing Rs. 8000 crore

NEW DELHI: The states ruled by opposition parties demanded that the central government compensate for the revenue loss caused by the GST tax reforms announced by Prime Minister Narendra Modi in his Independence Day speech.

Eight states, including Kerala, passed the resolution at a meeting at Karnataka Bhavan in Delhi on Friday. Apart from Kerala, ministers and officials from Karnataka, Tamil Nadu, Telangana, Punjab, Himachal Pradesh, Jharkhand and West Bengal were present.

There will be a 20 per cent reduction in the revenue income of the states, Finance Minister K.N. Balagopal said at a press conference at Kerala House. Kerala's income is expected to be reduced by about 8000 crores.

The meeting suggested that corporations should not be allowed to make excessive profits and that an additional duty be imposed on luxury goods. The issue will be raised in the GST Council to be held in Delhi on September 3 and 4. Ahead of that, the states ruled by opposition parties have decided to move in unison. It is estimated that the states ruled by BJP will also suffer a setback in their income if they adopt the new GST tax reforms.

For Kerala, the revenue loss will affect about 62 lakh people receiving welfare pension, said K.N. Balagopal. The minister fears that the situation will cause the government to discontinue schemes such as Karunya. GST compensation was received till 2022. In the last two years, only 32500 crores were received instead of 54500 crores. There may be a loss of 2.5 lakh crores in revenue income across the country. The Finance Minister also asked the Centre to ensure that the reduction in the prices of products benefits people.

KN Balagopal clarified that the tax reform will be raised in the GST Council as it puts in danger Kerala's lottery revenue. The minister said that lakhs of people will possibly bear the brunt of the reforms. The minister’s response came after Kerala Kaumudi highlighted the news about reforms the other day. The US tariff will affect one per cent of Kerala's revenue as it will badly hit the exports of fish products, spices and coir.