According to Finance Minister Nirmala Sitharaman, the eight northeastern states of India have experienced strong growth in Goods and Services Tax (GST) collection since its implementation. The GST revenue has seen an annual growth rate of about 27.5% in these states, leading to a significant increase in their resources.
Sitharaman highlighted some specific examples of the GST's impact in the region. Assam's central sales tax collection before the implementation of GST was ₹558.26 crore during 2016-17. However, after the introduction of GST, its IGST collection (Integrated GST, collected on inter-state supplies) increased manifold to ₹7,097 crore in FY23.
Similarly, Sikkim and Meghalaya also achieved significant growth in GST collections. Sikkim's collections increased from ₹263.5 crore to ₹3,136 crore, and Meghalaya's collections increased from ₹587.21 crore to ₹2,078 crore.
The GST is considered a symbol of how post-independence India can build a constitutional mechanism to foster cooperation between the center and states to improve revenues. It follows a destination-based tax principle, focusing on tax and consumption rather than where the goods are produced. This has been beneficial for the northeastern states, which are considered consuming states, as they have witnessed remarkable improvement in GST collection and the subsequent distribution of revenue between the center and states.
The finance minister also emphasized that there is still potential to widen the tax base in the northeast by bringing more small and medium enterprises, traders, and businesses under the ambit of GST.
Moreover, with the northeastern region sharing borders with four countries and covering about 7.75% of the country's borderline, there is a need to strengthen customs enforcement. Sitharaman mentioned that out of the 25 Land Customs Stations (LCS) in the region, only 15 have electronic facilities. The plan is to equip all remaining LCSs with electronic facilities by December to improve detection and prevention of smuggling activities.
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