BJP led government in Maharashtra hopes that 4 tier Goods and Services Tax (GST) rate slabs will help state to further consolidate its position as leading hub for manufacturing and logistics. At present manufacturing, engineering, construction and logistics together constitute 33% of the gross state domestic product. Besides, the government hopes the gain in services tax will be much higher.
State finance minister Sudhir Mungantiwar told Business Standard, '' There will be growth in manufacturing and logistics. The share of state GST in total GST will be slightly more than what it is today in Maharashtra Value-added Tax (VAT). The gain in services tax as part of the GST will be a total gain for all states including Maharashtra. Since the state is progressive one the gain in services tax will be much higher as it is bigger consumer of services.'' He informed that the higher tax revenue from GST will subsequently be used for the development of infrastructure and boost economic activities in the state.
Mungantiwar, who is striving to control revenue deficit, clarified that state will not lose revenue as the Centre has assured to compensate the loss for five years.
''Base year for calculating the revenue of a state would be 2015-16 and secular growth rate of 14 per cent would be taken for calculating the likely revenue of each state in the first five years of implementation of GST,'' he noted.
He informed that two major taxes including Octroi and Local Body tax will be subsumed in the GST. The government's assurance on compensation is crucial as the Brihan Mumbai Municipal Corporation, which mops up over Rs 7,000 crore through octroi annually, won't be a loser.