GST: Maharashtra govt urges Centre to revise devolution of tax share

The state believes that the GST could prove to be a boon for Maharashtra — which accounts for 58 per cent of the country’s service sector - by helping them seek higher share in devolution of taxes.

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Maharashtra has lost out on Rs 14,000 crore since LBT was discontinued.

Maharashtra has urged the Centre to revise the devolution of tax share when the uniform Goods and Services Tax (GST) is enforced across India, so that the state could compensate the financial losses it incurred after scrapping the Local Bodies Tax (LBT). It has urged for one per cent additional tax along with GST to tide over the revenue loss.

Chief Minister Devendra Fadnavis said, “We are very optimistic about the GST, which would bring a uniform tax regime model across the country. While some aspects still need to be addressed, the Centre has promised to support all states for the next five years to tide over financial differences. The details would be worked out once the GST is adopted in Parliament.”

The state has lost out on Rs 14,000 crore since LBT was discontinued. However, the financial implication of GST on the manufacturing sector is still unquantified.

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Initially, Fadnavis had proposed to the Centre to continue the financial help to bridge the tax gap for at least eight to ten years. But the Centre has indicated that it would provide cushion to states for the next five years. Most states have agreed to this.

The state believes that the GST could prove to be a boon for Maharashtra — which accounts for 58 per cent of the country’s service sector – by helping them seek higher share in devolution of taxes. Of the total revenue generated in the Centre, Maharashtra accounts for 36 -40 per cent. But its share is less than 8 to 10 per cent.

Sources in the finance ministry revealed: “Apart from the service sector, the state leads in manufacturing sector and has registered a growth at 6.2 per cent. It accounts for almost 21.5 per cent of the gross state domestic product.”