Kerala Public Expenditure Review Committee flags IGST settlement shortfall as ‘major concern and a puzzle’

Why in news

The Kerala Public Expenditure Review Committee (KPERC) flagged the persistent shortfall in IGST settlements as a structural anomaly despite increased interstate trade.

Background

The KPERC report highlights that Kerala has not benefited from IGST accruals despite improved GST revenue buoyancy. The committee identified systemic issues including deficiencies in place-of-supply rules and concentration of registrations in producing states.

Facts for Prelims

• FactKPERC: Kerala Public Expenditure Review Committee

For Mains

Q. Critically analyze the structural challenges in the IGST distribution mechanism and its impact on the fiscal federalism of consuming states like Kerala.

Dimensions to cover in your answer

• Rule ambiguity: Deficiencies in place-of-supply rules leading to tax leakage
• Registration imbalance: Concentration of registrations in producing states vs. consumption in others
• Data capture gap: Inadequate tracking of interstate service consumption in the GST framework

Keywords: Fiscal Federalism · IGST Settlement · Place-of-Supply · Revenue Buoyancy · Structural Anomaly

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