GST reforms split Opposition States: Kerala protests, Tamil Nadu cautious

The Opposition-ruled states’ reaction to the latest GST rate cuts has been a mixed bag, with Kerala claiming that it will lead to an annual revenue loss of Rs 8,000 crore to Rs 10,000 crore, while Tamil Nadu welcomed the GST reform even as it expressed concern for the protection of the state’s revenue.

However, Trinamool Congress, the ruling party in West Bengal, described the GST reforms as a “victory wrested from a tone-deaf regime”, adding that it was Chief Minister Mamata Banerjee who repeatedly warned the Centre over taxing GST on insurance premiums.

Kerala unhappy over compensation

Speaking to reporters, Kerala Finance Minister K N Balagopal said on Thursday (September 4) that adequate compensation should be provided to the states. He alleged that the issue was not taken seriously during the GST Council meeting.

“The state is expected to see an annual revenue loss of Rs 8,000 crore to Rs 10,000 crore due to the GST rate cuts,” said Balagopal.

The minister further stated that the estimated combined revenue loss faced by the state from the four sectors- cement, electronics, auto and insurance-will be to the tune of Rs 2,500 crore.

Also Read: GST reform shows how indirect taxes can be made even more indirect

Tamil Nadu welcomes GST reforms

As for Tamil Nadu, although the State government welcomed the GST reforms, including exemption of individual life insurance and individual health insurance services, but expressed concerns for the protection of the state’s revenue.

State Finance Minister Thangam Thennarasu said that either the current dispensation of Cess provision through constitutional amendment can be continued, or the bound rate of tax only for sin and luxury goods through GST Act amendment can be increased.

Participating in the 56th Goods and Services Taxes (GST) council meeting in New Delhi on September 3, the Minister emphasised that the report of the Committee of Officers on Integrated GST Settlement needed to be implemented in letter and spirit for streamlining the IGST settlement process, and the GST Council agreed to implement the same before the end of December 2025.

“The Minister welcomed the automated mechanism for sanction of provisional refunds for exports and inverted duty structure and supported the simplified registration mechanism for small and low-risk businesses to enable ease of doing business,” an official release here said.

Also Read: 40 pc GST: Full list of ‘sin goods’, luxury items and IPL match tickets

‘Hopeful that TN’s suggestions will be considered’

Since the Council recommended extending the period of levy of compensation cess on sin goods for 2 to 3 months beginning October 31, 2025, Thennarasu expressed hope that the GST Council may examine the suggestions of the Government of Tamil Nadu in the near future.

Tamil Nadu principal secretary, Finance Department, T Udhayachandran, principal secretary, Information Technology and Digital Services Department, Brajendra Navnit, Commissioner of Commercial Taxes, S Nagarajan, and senior officers from Tamil Nadu participated in the meeting.

Also Read: Centre rolls out new GST regime: Only 5 pc and 18 pc slabs from Sep 22

GST cuts results of her protests, says Mamata

West Bengal Chief Minister Mamata Banerjee, during her speech in the State Assembly, said that the Centre was “forced” to exempt insurance premiums from GST due to her demands.

The Chief Minister further stated that the recent decision by the GST Council to slash tax rates on a wide range of commonly used items, including personal health and life insurance, hair oil, corn flakes, and televisions, among others, was a result of her "repeated protests" over the years.

“I had demanded that insurance be exempted from GST. They were forced to do it,” she added.

Earlier in the day, West Bengal Finance Minister Chandrima Bhattacharya said that it was on the instructions of Chief Minister Mamata Banerjee that she stated in the GST Council meeting that there should be no burden of tax on the common people.

"West Bengal Minister Chandrima Bhattacharya says, "We supported the rate rationalisation proposal on two things. We want there to be no burden of tax on common people. So, our CM had said much before that there should be 0% tax on individual life insurance and health insurance. I said this in GoM as per her instructions. We raised this at the GST Council as well. We are happy that the Centre agrees with what our CM said," said Bhattacharya as quoted by ANI.

(With agency inputs)