A rating agency ICRA has come out with an unexpected positive sign for the states, mainly Maharashtra, Tamil Nadu, Karnataka, West Bengal and Gujarat for their increased profits in the generation in service tax after the implementation of goods and service tax which is now scheduled to be applied from July 1.
The assumptions are taken aback that the implementation of the goods and service tax will likely impact almost all the states revenue by any chance. The agency has got this stats from various calculations and it also mentioned that in some of the cases states can also earn a revenue below 14 percent after the implementation of goods and service tax, in the initial five years of commencement.
Recommended: GST Enrollment Guide for Service Tax Assessees
But the revenue would be neutralized as the goods and service tax would be taking the cess in a different way and would surpass the total loss caused by the implementation of the tax regime. As in the previous strings, states are getting 42 percent of service tax all which has been collected along with the imposition of center in the current scenario, while it is now pre-assumed that the states will now get whole proportion and 42 percent from the centre. ICRA mentioned that “Overall, we expect the transition to GST to be positive for some states, particularly on account of services.”
