A Significant Share of State Revenue Projected to Fall Outside GST Framework
New analysis indicates that a substantial portion of Indian state revenues, particularly from sectors like petroleum, real estate, and alcohol, may remain outside the Goods and Services Tax framework. This exclusion, accounting for about one-third of state tax income, challenges the 'one nation, one tax' principle and the broader aim of reducing illegal trade. For example, alcohol sales alone are projected to generate significant revenue for states.
The Goods and Services Tax (GST) implementation is progressing, yet recent analysis indicates that approximately one-third of state government revenue might remain excluded from this new taxation system. Key sectors such as petroleum products, real estate, and alcoholic beverages collectively account for around 37% of the total tax revenue for most states.
Excluding these significant sectors from GST contradicts the principle of 'one nation, one tax' and undermines the tax regime's objective to curb illicit trade. For instance, projections for the current fiscal year estimate alcohol sales alone to generate about INR 83,300 crores in revenue, with Karnataka and Kerala being among the leading contributors.
This information was detailed in a report by the Economic Times.