Chennai: Tamil Nadu that once used to oppose GST as it feared it would lose revenue as a manufacturing state has now begun to bat aggressively for the unified tax regime that kicked in Friday midnight.

As against an earlier perception, the state is expecting that it would not lose revenue on account of the new taxation regime, which is a diametrically opposite position that the state took under chief minister J Jayalalithaa.

But now it is a different story.

State finance minister D Jayakumar told media persons that the GST regime will increase manufacturing activity and inflation would be under control due to the new tax structure. The middle class and those living below the poverty line will be protected. The GST he said will also help the small and medium enterprises.

“There is absolutely no need to be afraid. Prices will come down, manufacturing will increase,” he said. There will be no revenue loss to Tamil Nadu and there are chances that the revenues of the state may see a rise in fact, “ he said.

“This is consumption based tax. If we are a manufacturing state, we will lose. But we are also consumption state also. If you look at both, there are only chances to get an increased tax revenue as against chances of losing. We will get around 50 per cent of the Service Tax, Central Excise etc,” said Jayakumar.

Many items which had exemptions are now having tax. Since there is tax in a complete value chain, we are expected to gain more, rather than losing. There will be some adjustment problems in the initial period, but once it is stabilised, GDP itself is going to grow around 1-2 per cent. Over 45 per cent revenue is from petroleum products and alchohol. It has not been subsumed under GST.

“We are calculating that the State will not have revenue loss because of GST,”said C Chandramouli, Additional Chief Secretary, who has full additional charge of Commercial Taxes and Registration Department.

Besides, there is compensation fund to compensate the States if there is any losses.

Jayakumar said that if a goods of Rs 1 lakh ex factory price is transported and sold in Chennai, under the GST, there would be a savings of Rs 19,927 at the end price, since the tax duplication is avoided. Under the previous tax rates, it would have costed around Rs 1,55,447 to a customer in Tamil Nadu, while under GST, it is around Rs 1,35,520 only.

The Minister said the state has taken up issues rasied by various industries including fire crackers, match box, textile sector and others. Every first Saturday of the month, the GST Council will meet and all these issues will be discussed, said Jayakumar.

He added, to create awareness about GST, the state has decided to have workshops across the state and earmarked around Rs 2 crore for the awareness programme.