Kerala FM meets Finance Commission chief; apprises about revenue loss on GST rate cuts

New Delhi, Sep 11 (PTI) Kerala Finance Minister K N Balagopal on Thursday apprised the 16th Finance Commission about the state's expected revenue loss due to the GST rate rationalisation.

Last week, the Goods and Services Tax (GST) Council approved a two-rate structure -- 5 and 18 per cent -- a move that will bring down the prices of a large number of items. The revised structure will be in force from September 22.

While supporting the GST rate rationalisation, Kerala has flagged concerns about potential annual revenue loss of Rs 8,000 to 10,000 crore for the state and has demanded compensation.

Briefing media in the national capital on Thursday, Balagopal said he met the Finance Commission Chairman Arvind Panagariya and members and apprised them about the revenue loss situation due to the GST rate cuts.

He submitted a supplementary memorandum to the Finance Commission.

Stressing that there will be a big cut in revenues for states, the minister said the estimated revenue loss annually for Kerala will be Rs 8,000 to Rs 10,000 crore, with loss of Goods revenues expected to be around Rs 6,300 crore.

Balagopal also mentioned about the negative impact of the high tariffs imposed by the US. Citing various estimates, the revenue impact due to the tariffs on the state's exports sector, including marine products and spices, will be about Rs 2,500 crore.

He expressed hope that the Finance Commission will consider its submissions positively.

Kerala's share from the divisible pool came down to 1.92 per cent during the 15th Finance Commission period compared to 3.87 per cent during the 10th Finance Commission -- a scenario which the state has been raising concerns about for long.

"Development should not be a negative thing... we (Kerala) need to get justice," Balagopal said.

Members of the 16th Finance Commission are Annie George Mathew, Manoj Panda, T Rabi Sankar and Soumya Kanti Ghosh. The Finance Commission is expected to submit its report to the Centre by October 31.

The Finance Commission's key role is to make recommendations on the distribution of net proceeds of tax between the Union government and the states as well as on the respective shares of each state. PTI RAM HVA