Service tax kitty of Maharashtra, TN, K'taka, WB, Guj to swell in GST: Icra

Business Standard By Indivjal Dhasmana January 19, 2017. 02:03 IST

At present, states get 42% of services tax collected and imposed by the Centre

PhotoFuel makes up over 40% of the operational cost of airlines in India. : Ramesh Pathania/Mint

Icra has assessed that Maharashtra, Tamil Nadu, Karnataka, West Bengal and Gujarat are likely to gain significantly in service tax revenues under the goods and services tax (GST) regime, likely from July 1.

Tax revenues related to services of nearly all states are likely to be favourably impacted after GST kicks in, it said.

"Overall, we expect the transition to GST to be positive for some states, particularly on account of services," Icra said in a note.

In the event that some states experience a revenue growth under GST below 14 per cent in the first five years, that would be neutralised, provided that the amount collected by way of the GST compensation cess exceeds the total revenue losses of the states related to the transition to GST, the rating agency said.

While states get 42 per cent of service tax collected and imposed by the Centre at present, they will get 42 per cent of central GST in services and the entire portion of service tax in state GST.

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