Kerala Faces Revenue Hit Amid GST Rate Cuts

Kerala is poised to experience an annual revenue shortfall of Rs 8,000 crore to Rs 10,000 crore following the latest Goods and Services Tax (GST) rate cuts, according to the state Finance Minister K N Balagopal.

Balagopal emphasized on Thursday that, while the state backs the GST rate reductions for their potential to decrease consumer prices, the central government must ensure these cost savings are passed on to the general public. Despite advocating compensation for affected states, Balagopal expressed disappointment over the lack of serious discussion during the recent GST Council meeting.

The GST Council recently sanctioned a simplified two-rate system of 5% and 18%, replacing the former four-tier schema. This decision, however, has sparked concerns about financial impacts on specific sectors including cement, electronics, auto, and insurance. Meanwhile, premium payments for life and health insurance policies have been exempted from GST, offering some respite to the middle class.

(With inputs from agencies.)