States Worry Over Revenue Losses Amid GST Rate Rationalisation Proposal by Centre

• States support GST rate rationalisation but are concerned about revenue losses
• GST Council meeting on September 3 and 4 may discuss compensation for states
• Proposal includes additional duty on sin and luxury items to maintain revenue
• New GST rates of 5 percent and 18 percent proposed, scrapping 12 percent and 28 percent rates
• Estimated revenue loss of Rs 50,000 crore this fiscal, over Rs 1 lakh crore annually
• Exemption of life and health insurance policies could lead to Rs 9,700 crore loss
• States worried about short-term impact and await Finance Commission report
• Karnataka, Kerala, Tamil Nadu, West Bengal, and Punjab express revenue concerns
• Karnataka estimates losses between Rs 85,000 crore to Rs 2 lakh crore
• Kerala estimates annual revenue dip of Rs 8,000 crore to Rs 9,000 crore
• Punjab and West Bengal also voice concerns over revenue losses
• Ambit Capital report estimates annual revenue loss from Rs 70,000 crore to Rs 1.8 lakh crore
• States to bear two-thirds of revenue losses due to lower rates
• Overall fall in GST revenues will reduce Centre’s gross tax revenues, affecting states’ share

Source: a2ztaxcorp.net

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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