Tamil Nadu Projected to Lose ₹15,000 Crore Due to GST Rationalization 

Tamil Nadu Projected to Lose ₹15,000 Crore Due to GST Rationalization

The article reports that the state of Tamil Nadu is projected to face a massive revenue shortfall, estimated at ₹15,000 crore annually, as a direct result of the recent Goods and Services Tax (GST) rate rationalization implemented by the Central Government.

Key Concerns for State Revenue

• Anticipated Revenue Loss: The estimated ₹15,000 crore deficit is a direct consequence of the GST Council’s decision to lower tax rates across various goods and services (GST 2.0). While these cuts are intended to boost consumption and affordability, they immediately reduce the revenue collected per transaction.
• Fiscal Federalism Issue: The projected revenue hit has raised concerns regarding fiscal federalism. The reduction in the state’s own tax base puts significant pressure on its finances, especially in the post-GST compensation era.
• Impact on State Projects: The substantial loss of revenue threatens the state’s capacity to fund its core welfare schemes, development projects, and planned capital expenditure without resorting to increased borrowing.
• Minister’s Stance (Implied): This figure aligns with the concerns raised by the Tamil Nadu Finance Minister (as noted in related articles) who has consistently alleged that developed, fiscally responsible states are penalized by tax reforms that reduce their tax base.