Kerala FM dismisses fears of price rise after GST

Kerala Finance Minister T M Thomas Isaac today dismissed the apprehensions that there would be price rise after the implementation of GST.
The Goods and Services Tax (GST), to be rolled out from July 1, was expected to have a positive impact on the economy of the state and the nation, Isaac told reporters here while elaborating the steps taken by the state government for the new tax regime.
The Kerala GST Ordinance has been accorded the governor's approval, he said.
On the benefits of the GST, he said it would help build a transparent and corruption-free tax administration and ensure dealer-friendly taxation mechanism.

Isaac, also a known economist, said though the southern state had apprehension on some issues connected with the GST, the state government has adopted a "positive approach" throughout in the GST Council.
The active intervention of Kerala in the Council had helped to protect the rights of states in many ways and also enable to have a low tax rate of four per cent for essential goods, he said.

"Kerala is all set to roll out the GST from July 1. Ours is mainly a consumer state. The GST being a destination-based tax, our tax collection is bound to increase. It is going to be highly beneficial for the state," he said.

The tax collection in the state would improve considerably in terms of telecommunication, financial and insurance services on the basis of destination principle, he said.
The minister also said merger of excise duty, service tax and VAT under one regime would result in substantial increase of tax base which in turn improve tax collection.
"For consumers on implementation of the GST, total tax load will come down substantially resulting in reduction in prices. So, there is no room for price hike...Prices of goods will come down," he said.
A tax concession to the tune of Rs one lakh crore is expected to reach people in general with the implementation of the GST, he said adding that the state's tax collection is expected to be increased up to 20 per cent in the next 2-3 years.

Isaac, however, said the possibility of the corporate monopolies, who ruled over the country's market, using the opportunity as a tool to increase price and make profit.
"Anti-profiteering authority has been constituted by making appropriate provisions in the Act itself. Any reduction in rate of tax of any supply of goods or services for the benefit of input tax credit shall be passed on the recipient by commensurate reduction in prices," he said.
This could be effectively implemented only if the primary stake holders, that is consumer, will be made aware of the benefits passed on to dealer by the present Act, the minister said.

Though hotel food would become costlier, the GST would leave a positive impact on the state lottery. It would not cause any harm to state tourism sector also, Isacc added.
With the GST introduction, the traditional border check posts would be abolished and the e-way bill would be introduced, he said.
On questions of tax evasion, the minister said "the tax evasions will surely come down. But, we can not say that it can be rooted out completely."
However, Isaac disputed the Centre's claim that the new tax regime would make an overall change in the economy of the nation.