Kerala has not benefited from GST regime, finds Estimates Committee of the State Assembly
Observing that Kerala has not benefited as expected from the Goods and Services Tax (GST) regime, the Estimates Committee of the State Legislative Assembly has called for a comparative study of the State’s tax revenue growth before and after the introduction of GST and projections of what the revenue would have been had GST not been introduced.
The committee (2023-2026 period), which placed its report before the Assembly on October 7, has sought an urgent report from the government in this regard.
As part of its recommendations, the committee has asked the government to introduce the e-way bill system for gold and other precious metals, tighten enforcement through regular inspections and take steps to ensure that the State does not lose tax revenue in online transactions.
Revenue loss
Delay in introducing e-way bills for gold and other precious metals is causing revenue loss to the State, the committee said. In fact, neighbouring States such as Karnataka were benefiting from this scenario, it found. The e-way bill system was introduced on April 1, 2018, for all inter-State movement of goods with value exceeding Rs.50,000. It was made mandatory for intra-State movement of goods valued above Rs.50,000 from April 15, 2018.
Further, the committee has sought the urgent introduction of State tribunals under the GST regime and waiver of GST for infrastructure works using the MLA, MP funds.
The committee concluded that Kerala’s hopes that, as a consumer State, it stood to gain from the GST regime were dashed. Multiple reasons existed for Kerala failing to record the expected growth in tax revenue despite it showing an increase over the years. Further, after the introduction of the GST in 2017, tax revenue from some sources has dipped, while it was lost in the case of certain other trade sectors, the committee, headed by K.K. Shailaja, MLA, said. It is in this context that the panel has recommended a comparative study of pre-GST and post-GST revenue growth and an assessment of the revenue growth in a hypothetical scenario where the GST was not introduced.
Non-GST revenue
As per the report, Kerala’s GST revenue grew from Rs.12007.7 crore in 2017-18 to Rs.30,944.48 crore in 2023-24. Non-GST revenues from sources such as Kerala General Sales Tax and Value Added Tax grew from Rs.24,580.7 crore to Rs.27,626.61 crore during the same period.
The committee has also suggested that sector-wise inspections be made a regular affair to check tax evasion. Its report to the House pointed to the tax raids (Operation Palm Tree) which unearthed fraudulent transactions in the metal scrap trade in 2024 as an example. Such inspections should be carried simultaneously in all locations, it said.
