To make up for the lost revenue after GST is implemented, State governments have planned to keep one-third of the taxes out of it. This will make sure costumers do not get to enjoy the privilege of saving taxes in the categories excluded.
According to a report by Motilal Oswal Securities, based on a survey of data from 17 states, states have decided to exclude portfolios like alcohol, real estate, petroleum and Oil & Lubricants. These categories together accounted for over 37% of the revenue from taxes.
The oil sector has a yearly review for changes in policies, if needed. However, there are no such conditions in the other categories. Finance departments of various states do not want to lose out on the portfolios, which have been the biggest cash cows since decades.
The report by Motilal Oswal was based on analysis of 17 states, which together, account for over 85% of India’s GDP. The government is planning to bring GST to introduce transparent and easier way of taxation, however, the fate of these portfolios, still remains under question.