GST relief to small biz will cost states Rs 7,000 crore: Kerala FM
Thomas Issac slams exemption limit hike for MSMEs, composition scheme extension

Kerala Finance minister Thomas Issac has criticised the GST Council decision on Thursday offering relief to small businesses saying that it will have a financial impact of Rs 7,000 crore for the states.

“The GST Council decisions would cost the state governments around Rs 7,000 crore,” Issac told Financial Chronicle.

The revenue loss is on account of the hike in GST exemption threshold to Rs 40 lakh from the earlier Rs 20 lakh. The governments will also lose due to changes in the GST Composition Scheme, under which small traders and businesses pay a 1 per cent tax based on their turnover. This scheme has also been extended to service providers, up to a turnover of Rs 50 lakh at a tax rate of 6 per cent.

Along with the hike in limit of composition scheme, this decision is estimated to have an annual revenue impact of about Rs 3,000 crore. Issac did not give any break up of the revenue loss but the Rs 7,000 crore, he noted, was the overall figure covering these decisions.

Asked about why the GST threshold limit was not raised to Rs 75 lakh as was deliberated earlier from the Rs 20 lakh stipulated for the MSMEs, he said, “Everybody should be in the tax net. We want more and more in GST trail.”

Assam finance minister Hemant Biswa Sarma has tweeted that the proposal for increasing the threshold limit for GST registration exemption was up to Rs 75 lakh or at least Rs 50 lakh annual turnover but the Congress and AAP ministers resisted it. The doubling of the threshold is expected to benefit around 2 million small traders.

On the real estate issues being referred to the GoM against an expectation of GST rates being brought down to 5 per cent for under-construction flats. Issac said, “There were legal issues on land. Legally, GST cannot be imposed on land. There were practical issues of identifying various types of construction. So it was thought not to hurry the decision.”

The Council did not discuss cement GST rate cut to 18 from 28 per cent this time as states fear an annual loss of Rs 13,000 crore.

Cement under GST is going to cause losses, so it was thought to be out of discussion as of now, the Kerala FM said.

He said a discussion also took place in the Council on the issue of lotteries. However, it was left to a the GoM and then to be taken up for discussion. “But Kerala will never accept this middlemen lottery to come to Kerala,” he added.