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GST to benefit Kerala with 20% increase in tax revenue

  • GST Council has agreed to grant most of the demands raised by the state
  • The new system is expected to ensure more transparent business and will contribute to ending corruption
  • Service sector in Kerala contributes to 75% of GDP
GST Kerala to get 20 percent increase tax revenue


Endorsing Central Government's decision to introduce different tax rates for services, as it did for goods, Kerala Finance Minister T M Thomas Issac said the Goods and Service Tax (GST) would benefit the state to a great extent. Kerala is planning to introduce GST Bill along with Finance Bill in coming budget session, he said. 
 

The Centre is planning to roll out GST from July, and economists believe this to be a game-changing decision like demonetisation. Unlike its stance towards demonetisation, Kerala is all positive about the new tax system and believes that it will help increase the tax revenue of the consumer state. 
 

"The system will ensure more transparent business and will contribute to ending corruption. The destination-based tax system will help increase tax revenue by 20%. However, actual benefit to consumers would be known only after confirmation of tax bracket," the minister said. 
 

States is sure to take advantage from the decision of GST Council to grant 90% of indirect tax from businesses with turnover less than ₹1.5 crore. The move will be beneficial for Kerala which has several small-scale and medium-scale merchants. Further, having marine borders and Vallarpadam Container Transshipment Terminal and upcoming Vizhinjam Port, the state need to have the right to tax maritime trade to broaden its treasury revenue.
 

The Council has decided to grant most of the demands raised by the state. The move will benefit Kerala if the state can ensure an investment-friendly ambience. 
 

With the new system, the state, which consists of only 2.75% of India's population accounts for over 15% of the market for durable goods, will get the upper hand in revenue collection. The service sector in Kerala makes up to 75% of GDP. With the introduction of GST, the tax will be imposed at the consumer level, and the state will see an increase in tax revenue. 

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