Kerala Slams Union Govt. Over GST Cuts, Faces Rs. 10,000 Cr Loss

Thiruvananthapuram: Kerala Finance Minister K. N. Balagopal has strongly criticised the Union Government’s decision to revise GST rates without consulting states. He warned that the new rates, which came into effect unilaterally, could cause an annual revenue loss of Rs. 5,000 to Rs. 10,000 crore for Kerala alone.

While the Minister agreed that reducing GST rates is not a bad idea, he stressed that the benefit must reach the people — not just private companies.

States had demanded that the revenue loss caused by the rate cuts be compensated. But the Union Government reportedly dismissed the concerns. Even when raised during the GST Council meeting, there was no assurance. Instead, took an arrogant stance, saying if there’s disagreement, go for a vote.

Balagopal pointed out that the GST Council is not like Parliament where there's a ruling party and opposition. It’s a platform where the Union Government and states must work together. But the Union Govt, he said, acted on someone’s direction and imposed the decision without consensus.

One of the biggest shocks for Kerala came in the form of a steep tax hike on paper lotteries. Despite Kerala's request to retain the 28% GST on lotteries, the rate was hiked to 40%. Back in 2017, the GST on lotteries was just 12%. It was raised to 28% in 2020. Now, moving to 40% means a 350% hike in just a few years. The union govt. equated state-run lotteries with gambling and betting, ignoring the fact that over 2 lakh people in Kerala depend on this sector for their livelihood.

The Finance Minister warned that this move would severely impact the state lottery. With no option to increase ticket prices or reduce commission, many lottery agents could lose income. Already, each worker stands to lose Rs. 4 per ticket in commission.

Adding to the state’s concerns, the Union Government plans to continue collecting cess on top of GST — expected to generate around Rs. 1 lakh crore. But it has refused to share this revenue with the states, even when BJP-ruled states also raised concerns.

From September 22, the new rate will be enforced, leaving little time for the Kerala government to prepare. The lottery sector is a major source of revenue, which funds crucial welfare programmes like the Karunya Benevolent Fund that supports free medical treatment for 42 lakh families.

Kerala’s official lottery has a strong track record — free from scams or irregularities — and supports many marginalised workers including the people with disabilities, elderly, and economically weak.

Balagopal also pointed out that the total revenue loss across India due to the revised GST rates will be around Rs. 2.5 lakh crore. In Kerala alone, four sectors — automobile, cement, electronics, and insurance — will face a combined loss of about Rs. 2,500 crore. He added that if this is not addressed, Kerala’s financial stability could be at risk. Welfare schemes, including pensions and free healthcare for the poor, might be affected due to lack of funds.