Kerala Public Expenditure Review Committee flags IGST settlement shortfall as ‘major concern and a puzzle’
Kerala's Public Expenditure Review Committee has identified a significant and unresolved shortfall in IGST settlements as a major concern for the state.Summary
The Kerala Public Expenditure Review Committee (KPERC) has highlighted a persistent issue regarding integrated goods and services tax (IGST) settlements, describing it as a “major concern” and “a puzzle yet to be resolved.” The committee’s first report, covering 2021-22 to 2023-24, noted improved GST buoyancy but found Kerala has not benefited as expected from IGST accruals despite being a consumption-oriented state heavily reliant on interstate supplies. The KPERC attributes this to systemic issues, including deficiencies in place-of-supply rules, registration concentration in producing states, and inadequate tracking of interstate service consumption. Kerala imports approximately ₹1.5 trillion worth of goods while exporting around ₹550 billion, resulting in a trade deficit of ₹1 trillion. Despite this, Kerala’s IGST share remains low at 1.2%, significantly below the expected ratio of 3, indicating that its reliance on interstate purchases isn’t translating into increased IGST revenue. The Kerala government has previously raised this issue with the GST Council, but the problem persists, as confirmed by the 7th KPERC’s report.
(Source：The Hindu)