Blog Content:
States May Explore Passenger and Goods Tax to Boost Revenue Post-GST Cuts
The recent Goods and Services Tax (GST) cuts have provided much-needed relief to consumers and industries. However, they have also created a challenge for states that are heavily dependent on GST revenue. To address this, Prof. Sacchidananda Mukherjee, a leading public finance expert, has suggested that states explore the levy of passenger and goods taxes to bridge the revenue gap.
Why States Need Alternative Revenue Sources
With GST being a destination-based tax, states often rely on compensation and tax-sharing mechanisms to balance their budgets. After the expiry of GST compensation from the Centre, many states have been struggling to meet expenditure demands. Lower GST rates, while pro-consumer, have intensified this issue.
Introducing passenger and goods taxes could provide:
Additional revenue streams for state governments
Greater financial autonomy in policymaking
Sustainable funding for infrastructure, transport, and welfare schemes
How Passenger and Goods Tax Can Work
Passenger and goods taxes are not new to India. Before GST, several states levied such taxes to support local infrastructure and transport systems. Reintroducing them in a modern framework could help states:
Impose small surcharges on inter-state transport
Levy nominal charges on goods movement to fund logistics improvements
Allocate funds for road safety, transport modernization, and rural connectivity
Expert Insights from Prof. Sacchidananda Mukherjee
Prof. Mukherjee emphasizes that while GST remains the backbone of India’s indirect taxation, states should not depend entirely on it. Exploring innovative taxation models like passenger and goods tax can help states manage fiscal deficits without overburdening consumers.
The Role of Vizzve Finance
At Vizzve Finance, we track the evolving tax and revenue landscape to help businesses, investors, and policymakers understand fiscal changes. Our experts provide insights on how new taxation measures, like passenger and goods levies, could affect industries, trade, and economic growth.
Trending Insights
This discussion on passenger and goods tax has already gained attention in financial and policy circles. With rising interest, blogs on this subject have been fast-indexed on Google and trending in the taxation and state finance category, showing how relevant this debate is to India’s economic future.
FAQ Section
Q1: Why are states considering passenger and goods taxes now?
States are facing revenue shortfalls due to GST rate cuts and the end of GST compensation. Passenger and goods taxes could provide an alternative revenue source.
Q2: Will this increase the cost for consumers?
The impact on consumers will likely be minimal if taxes are kept nominal. The collected revenue can fund infrastructure and transport improvements that benefit the public.
Q3: How is this different from GST?
GST is a nationwide indirect tax, while passenger and goods taxes are state-level levies that provide localized financial support.
Q4: Did states use passenger and goods taxes before GST?
Yes, many states had such taxes before GST was introduced in 2017. They were later subsumed under GST.
Q5: How can businesses prepare for these changes?
Businesses should track policy developments and consult financial experts like Vizzve Finance to assess compliance and cost implications.
Published on : 22th September
Published by : aswini
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