The Hindu : Kerala News : Liquor, petrol, diesel out of GST

Online edition of India's National Newspaper
Monday, May 24, 2010
ePaper | Mobile/PDA Version

Kerala

Kerala

Liquor, petrol, diesel out of GST

C. Gouridasan Nair

Kerala set to retain over Rs.7,300 crore a year in sales tax and excise duty

T.M. Thomas Isaac says States' revenues cannot be lowered.

THIRUVANANTHAPURAM: With the States putting up a strong resistance, the Centre has agreed in principle to keep liquor, petrol and diesel out of the Goods and Service Tax (GST) regime, which will enable Kerala to continue to earn roughly Rs.7,300 crore annually in sales tax and excise duty from these products.

The Centre gave this assurance to the State governments at a meeting of State Finance Ministers convened by Union Finance Minister Pranab Mukherjee in New Delhi on Friday to discuss the modalities for implementing the GST in the face of strong resistance to the Central proposal to place these goods under the new tax regime with reduced tax rates. Kerala was represented at the meeting by Finance Minister T.M. Thomas Isaac and Principal Secretary (Taxes) P. Mara Pandiyan.

Dr. Isaac told The Hindu here on Saturday that Kerala, along with the other States, had made it clear at the meeting that there was no question of its agreeing to the Central move to take liquor and the petroleum products out of the sales tax regime or cutting into the States' revenues with lower taxes. The State Finance Ministers had also told Mr. Mukherjee that the States must be fully compensated for the losses likely to arise from the implementation of the GST. Many of the nitty-gritty of the GST rollout, including the actual collection methodology, remained to be discussed and thrashed out and this would be done in the coming few weeks.

Mr. Mara Pandiyan said that with the Centre agreeing to allow the States to tax liquor, petrol and diesel, Kerala would get to retain the Rs.2,900 crore from sales tax and Rs.1,400-plus crore from excise duty on liquor and another Rs.3,000 crore from the sales tax on petrol and diesel. The Centre, he pointed out, has agreed to fully compensate the States for any likely loss in tax revenue on account of the implementation of the GST. Kerala being a consumer State, the implementation of the GST would be beneficial for the State.

The Union Finance Minister had also informed the meeting that the Centre was ready to compensate the States for losses sustained on account of the reduction of the Central sales tax from 4 per cent to 2 per cent, to compensate the States for losses sustained during the financial year 2010-11 and enhance the amount proposed to be set apart for GST compensation from the proposed Rs.50,000 crore. Formal decisions are likely at the next meeting of State Finance Ministers in two or three weeks, he added.

Printer friendly page
Send this article to Friends by E-Mail

Kerala