Chennai: Tamil Nadu Chief Minister M.K. Stalin has voiced strong criticism of the new Goods and Services Tax (GST) reforms announced by Prime Minister Narendra Modi, arguing that while they provide relief to consumers, state governments are forced to bear a significant portion of the financial impact.
The GST reforms, which came into effect on September 22, introduced a simplified two-tier tax structure of 5% and 18%, replacing the previous four-slab system. Prime Minister Modi hailed the move as a “GST bachat utsav” (GST savings festival) and claimed it would save Indians an estimated ₹2.5 lakh crore.
However, Stalin contested this claim, stating, “Moreover, it is our duty to point out that 50% of this relief has been actually borne by the State Governments, a fact which the Union has failed to acknowledge as well as appreciate.” Under the GST framework, revenue from transactions within a state is split equally between the Central and State governments. Therefore, a reduction in tax rates directly impacts the revenue collected by the state. The reforms have also reduced GST on a wide range of goods, from food items to consumer durables, which will result in a drop in tax revenue for both the Centre and the states.
Stalin further pointed out that the GST reforms, which the Prime Minister is now lauding, have been a long-standing demand of the Opposition. He remarked that if these measures had been implemented eight years ago, the cumulative savings for families across the country would have been significantly higher.
In a separate but related attack on the Centre, the DMK chief also took to X (formerly Twitter) to express his frustration over what he described as the denial of funds to Tamil Nadu. “Tamil Nadu is being denied #SamagraShiksha funds only because we refuse to accept #HindiImposition. When will this injustice end?” he wrote.
The Samagra Shiksha Abhiyan is a Centrally Sponsored Scheme by the Union Ministry of Education that aims to improve school education from pre-school to class 12. Tamil Nadu has been in a long-standing dispute with the central government, alleging that funds under this scheme have been withheld due to its opposition to the New Education Policy (NEP) and its two-language policy, which rejects the three-language formula proposed by the Centre. The state government has moved the Supreme Court over this issue, arguing that the withholding of funds for political reasons undermines the principles of federalism.