Thiruvananthapuram: Kerala's fiscal health has been dented with mounting public debt and poor revenue collection.
Worsening the revenues, the State stands to lose over Rs 10,000 crore as its share of the Integrated Goods and Services Tax (IGST) as the government failed to submit proper accounts to the Centre.
The Expenditure Review Committee appointed by the Kerala Government has said in its report that the State had lost Rs 25,000 crore over the last five years due to failure in revising the Integrated Goods and Services Tax (IGST) return forms.
What is IGST?
The Central Board of Indirect Taxes and Customs defines IGST as a mechanism to monitor the inter-State trade of Goods and services and further to ensure that the State Goods and Services Tax (SGST) component accrues to the destination/consuming State although the tax is paid in the originating State.
IGST, which is one of the three components of Goods and Services Tax or GST, is levied when there is an inter-state transfer of goods and services.
The other two GST components are CGST or Central Goods and Services Tax and SGST or State Goods and Services Tax. GST was implemented in the country five years ago.
When a product or service is sold or transported from one State to another, half of the tax goes to the State and the other half to the Centre. But due to the mistakes committed by traders while filing the returns, the buyer or consumer State does not get its share of the tax in a proper or timely manner.
Expenditure Committee recommendations
The Expenditure Committee report, which estimated that Kerala had suffered a loss of Rs 5,000 crore each year, also includes detailed suggestions on revising the IGST returns and the points to be raised before the GST Council.
The Expenditure Committee has recommended the State Government to prevent leakage of IGST revenue by helping the traders to avoid errors while filing the returns. The Committee is of the opinion that at least Rs 5,000 crore could be garnered annually by adopting this method.
The Committee pointed out that the State Government would lose its annual share of Rs 5,000 crore, which became due to it after the implementation of the GST regime, unless proper intervention is made as per its suggestions.
The report was submitted in December 2022. Instead of implementing the recommendations of the Committee on an emergency basis, the government, fearing a controversy, is covering them up.
The Union Finance Ministry claims it has not received the report. N K Premachandran, MP, asked the Union Finance Minister a question in the Lok Sabha the other day by referring to the contents of the report.
At the same time, an assessment shows that the claim made by State Finance Minister KN.Balagopal on the GST compensation is correct. Only Rs 750 core more is due to Kerala as GST compensation.
