Tamil Nadu seeks 70:30 GST share, not 50:50 formula

CHENNAI: The State government on Thursday sought a larger share of GST revenues, proposing a 70:30 division between the states and the Centre, instead of the existing 50:50 arrangement, at the 57th GST Council meeting in New Delhi.

Finance, Planning and Development Minister N Marie Wilson, who represented the Tamil Nadu government at the meeting, said states bear more than 60 per cent of public expenditure and therefore require a greater share of GST revenues to address fiscal imbalances.

Marie Wilson also urged the Centre to provide special packages to exporting states such as Tamil Nadu, outside the devolution mechanism and GST revenue-sharing framework. Such support, he said, would encourage states to invest further in physical and social infrastructure and strengthen their competitiveness.

The minister welcomed the proposal to include input tax credit accumulated on capital goods for GST refunds on exports. He also supported including input services in refunds under the inverted duty structure and liberalising provisions relating to blocked credits, while cautioning that the measures could reduce states’ revenues.

Drawing on representations from trade associations during a pre-GST Council consultation held in Tamil Nadu on September 3, Marie Wilson said differential GST rates on staple foods such as rice were anomalous and sought exemption irrespective of quantity.

He further sought a reduction in GST on job work from 18 per cent to 5 per cent to ease working-capital constraints faced by micro, small and medium enterprises and support manufacturing and export sectors ranging from agarbatti to automobiles.

Marie Wilson also supported a proposal to prescribe a minimum tax amount of Rs 10,000 for issuing notices under Sections 73, 74 and 74A of the GST Acts, saying it would ease compliance-related difficulties for taxpayers involving smaller amounts.