The State government has formed a five member committee under the chairmanship of Arvind Subramanian, former Chief Economic Adviser to Government of India to study the settlement pattern of Integrated Goods and Services Tax (IGST) to Tamil Nadu.
The IGST is levied and collected by the Centre on inter-State supply of goods and services and settled with the States.
Goods and Services Tax (GST) is realised fully based on consumption and the consumption is of two categories- one by the business and another directly by the consumers in the State, a government order said.
Under the Goods and Services Tax (GST) regime the revenue due to Tamil Nadu accrues through payment of State Goods and Services Tax (SGST) by the taxpayers and IGST settlement received from the Union Finance Ministry based on the details furnished by the taxpayers in the State and other taxpayers in their monthly returns filed through front-end portal, it noted.
In addition to IGST by way of regular settlement, ad hoc IGST settlements were received at different intervals from the Government of India which has been completely stopped from October 2022, the government order said.
An analysis of pattern of settlement of IGST both regular and ad hoc shows that there is no proportionate increase in total IGST settlement to Tamil Nadu even though there has been an increase in consumption over a period, it pointed out.
Based on a proposal received from the Principal Secretary/Commissioner of Commercial Taxes and a meeting held by the State Finance Secretary in July, the government has constituted the committee to study the settlement pattern of IGST to Tamil Nadu and issued its terms of reference in a government order dated August 25.
The five member committee include H. Krishnan Unni, Joint Secretary, Finance Department, M Parameswaran, Additional Commissioner (Revenue Collection and Monitoring), Commercial Taxes Department, Professor R Srinivasan, Member Planning Commission, K Vaitheeswaran, Advocate and Tax Consultant and G Natarajan, advocate.
Advocates Vaitheeswaran and G. Natarajan are part of the advisory council constituted by the state government to develop a federal fiscal model. The committee will study how IGST is being settled to the States and method of settlement. It will also study the component of IGST that affects the settlement to Tamil Nadu when consumption is increasing year on year.
The impact of IGST over the SGST collection and vice versa in Tamil Nadu specifically when industrial production is increasing and why ad hoc IGST has not been settled after October 2022, are other issues that the committee would examine.
The committee will recommend ways to fully capture the IGST sales of both goods and services through digital mode where the place of supply is Tamil Nadu. Besides, it would suggest ways to augment revenue through closed monitoring of e-commerce and digital services.