THIRUVANANTHAPURAM: Asserting that there was no guarantee that the Goods and Services Tax (GST) rate cuts would benefit consumers, Finance Minister K N Balagopal urged the Centre to ensure companies actually pass on the gains.
Speaking after the GST Council meeting in Delhi on Wednesday, Balagopal maintained that while many states, including Kerala, supported rationalisation of rates, the Centre failed to put mechanisms in place to protect consumers as well as compensate states for the huge revenue loss.
“I have been on the rate rationalisation committee for three-and-a-half years. We supported lowering of tax rates. However, companies often increase prices instead of reducing them. Who gains from this?” he asked.
On what the rate cuts would mean for the state, Balagopal said Kerala could lose Rs 450 crore from insurance alone and around Rs 2,500 crore from just four sectors – automobiles, cement, insurance and electrical goods. “If extended to all 390 items, the impact would be far bigger. Overall, Kerala faces a loss of Rs 8,000-Rs 10,000 crore annually,” he said, adding that this would strain welfare schemes as the state already spends nearly all of its revenue on salaries and pensions.
Highlighting the hike in GST on so-called sin goods such as tobacco from 28% to 40%, Balagopal said the revenue goes entirely to the Centre, not states. He also criticised the steep GST increase on lottery tickets from 28% to 40%, calling it unjustified as it directly affects the livelihood of around two lakh people.