BackNortheast biggest beneficiary of GST: Nirmala Sitharaman
Sitharaman said that the northeast has benefitted from the emphasis given by the government on infrastructure creation and connectivity improvement
PremiumNew Delhi: North Eastern states have benefitted from the implementation of Goods and Services Tax (GST) by way of a big jump in their revenue collections after the tax reform in 2017, finance minister Nirmala Sitharaman said at an event on Saturday.
Speaking at the ‘Conclave 2023’ in the capital, Sitharaman said that the northeast has benefitted from the emphasis given by the government on infrastructure creation and connectivity improvement. The region has also benefited from the higher tax transfers to the states as well as by way of funds given to them for asset creation, the minister said.
Sitharaman said that not only tax collections, in general, have improved, but it has improved even in areas where manufacturing activities are less. That is not to say manufacturing states have lesser GST collection, the minister explained. States with strong industrial production bases are also big consumers and benefit from the taxes on items produced and consumed in the state as well as from the tax on those items imported from other states for local consumption.
GST is a destination-based tax on consumption and the importing states get the tax on inter-state trade, unlike in the pre-GST regime. This is a big advantage under GST for states with little manufacturing base as they receive proceeds of Integrated GST (IGST) receipts on imports.
Sitharaman explained that although areas like the northeast have lesser manufacturing activities, both the collection of GST and the devolution of tax from the central government have actually resulted in good revenue generation for the northeastern states. “Northeastern states have been the biggest beneficiary of GST," the minister said.
Sitharaman also said that the states in this region have witnessed a compound annual GST revenue growth rate of 27.5% since the implementation of GST. The pre-GST annual growth rate was 14.8%. This is a boon for the states as it strengthens their hand in implementing programmes, the minister said.
Sitharaman also said that tax devolution to this region has quadrupled between 2014 to 2023. Now it is at ₹5.06 trillion. The minister also said that northeastern states have been granted ₹15,440 crore interest-free 50-year loans for capital asset creation since 2020-21.
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