Kerala to incur ₹2,500 cr loss from four sectors alone under new GST rates: KN Balagopal

Kerala Finance Minister KN Balagopal on Thursday said the state is expected to incur a loss of ₹2,500 crore from the implementation of the new GST rules on just four sectors — automobiles, cement, electronics, and insurance. He added that the combined revenue loss for both the state and the Centre from these sectors would exceed ₹5,000 crore.

Speaking to the media in New Delhi, Balagopal added that the exact loss the state is expected to face has not yet been fully calculated. "From just the four items alone, the loss will be ₹2,500 crore. The new GST rates apply to more than 360 items, and we have not calculated the full impact yet," the Finance Minister said. However, he added that the state is expected to see an annual revenue loss of ₹8,000 crore to ₹10,000 crore.

He also asked the central government to compensate states for the revenue losses expected under the new GST system. "The Centre is reluctant to address the issue. They have to compensate the states for their losses," he said.

On Wednesday, the GST Council approved a two-rate structure- 5 and 18 per cent- from the current four slabs- 5, 12, 18 and 28 per cent.

Balagopal added that eight non-BJP-ruled states have raised this concern with the central government. He claimed that BJP-ruled states are also worried about potential losses but are hesitant to speak out due to fear of political backlash.

Balagopal also emphasised that the benefit of the tax cuts should reach the people. He pointed out that companies often raise product prices to offset the difference caused by tax reductions. 

Citing the example of cement companies increasing prices by ₹30, he said the GST rate cut provides a relief of ₹28–₹30, but the price hike effectively nullifies the benefit for consumers. "The GST department and the government will take measures to ensure that the benefit reaches the people," he said.