Revenue won't dip due to GST, assures Tamil Nadu FM Jayakumar

Middle-class and people living below the poverty line will be safeguarded, says D Jayakumar

The state of Tamil Nadu said on Saturday that its revenue post the implementation of GST will either be neutral or may increase, but won’t see a dip. The state had earlier objected to GST saying that it may lead to a fall in revenue.
 
Tamil Nadu Finance Minister D Jayakumar told reporters that manufacturing will increase and inflation will be controlled due to GST.
 
He added that the middle-class and people living below the poverty line will be safeguarded and it will also help small and medium enterprises.
 

“There is absolutely no need to be afraid. Prices will come down, manufacturing will increase,” he said.

 
Initially, the state had apprehensions about the manufacturing state losing revenue due to the implementation of GST, which was likely to favour the consumption states.
 
“This is consumption-based tax. If we are a manufacturing state, we will lose. But we are also a consumption state. If you look at both, there are only chances to get an increased tax revenue as against chances of losing. We will get around 50 per cent of the service tax, central excise, etc,” said Jayakumar.
 
“Many items that earlier had exemptions are now under the tax bracket. Since there is tax in a complete value chain, we are expected to gain more, rather than losing. There will be some adjustment problems in the initial period, but once it is stabilised, GDP itself is going to grow around 1-2 per cent. Over 45 per cent revenue is from petroleum products and alcohol. It has not been subsumed under GST.”

 
“We have calculated that the state will not face any loss of revenue,”said C Chandramouli, Additional Chief Secretary, who has full additional charge of Commercial Taxes and Registration Department.
 
Besides, there is a compensation fund to compensate states if there are any losses.
 
Jayakumar said that if goods worth Rs 1 lakh ex-factory price is transported and sold in Chennai, under the GST, there would be a savings of Rs 19,927 at the end price, since the tax duplication is avoided.
 
Under the previous tax rates, it would have costed around Rs 1,55,447 to a customer in Tamil Nadu, while under GST, it is around Rs 1,35,520 only. The consumer can save around Rs 3,000 in tax alone, he added.

 
The minister said the state has taken up issues raised by various industries, including fire crackers, matchbox, textile and other sectors.  Every first Saturday of the month, the GST Council will meet and all these issues will be discussed, said Jayakumar.
 
He added, to create awareness about the new taxation system, the state has decided to have workshops across the state and earmarked around Rs 2 crore for the awareness programme.