Nagaland CM Calls GST the ‘Backbone’ of State Economy, Stresses Timely Tax Compliance

Nagaland Chief Minister Neiphiu Rio has strongly emphasized the importance of Goods and Services Tax (GST) as the backbone of the state’s economy, underlining its role as the principal source of revenue. Addressing the Assembly on September 2 during Zero Hour, Rio called on all citizens to treat tax compliance as a collective responsibility and to transform timely tax payment into a “people’s movement” aimed at ensuring the financial stability and sustainability of Nagaland.

The discussion was triggered by MLA A. Pongshi Phom, who raised concerns about the state’s tax regime and highlighted GST’s significance as the backbone of Nagaland’s exchequer. Phom acknowledged the economic potential of Nagaland in various sectors such as food packaging, fruit juices, pickles, and biofuels. However, he pointed out persistent gaps in tax collection, particularly discrepancies between Value Added Tax (VAT) and GST revenue. According to him, while there are areas of economic promise, inefficiencies in the system hinder optimal revenue generation.

Phom supported his concerns with data, noting a sharp rise in GST collections. The state’s GST revenue experienced a remarkable 104% year-on-year growth in June 2025, building on robust increases of 43% in April and 44% in May. This surge, he argued, was driven by reforms, stricter enforcement, and growing compliance among businesses. Despite this progress, Phom said there was still considerable scope for improvement.

To enhance the efficiency of GST implementation, Phom proposed that the government expand the tax’s reach into additional sectors. He suggested areas such as commercial house rentals, the sand and stone chips industry, and unauthorized transport services could be brought under GST to broaden the tax base. He also emphasized the need to amend outdated provisions of GST laws to make them more effective and relevant to current economic conditions.

Another major concern raised was the role of Drawing and Disbursing Officers (DDOs). Phom insisted on timely filing of GST returns by DDOs, as delays cause inefficiencies and revenue leakages. Additionally, he proposed setting up a State GST Grievance Redressal Committee, which would include representatives from the government, trade bodies, and tax professionals. Such a committee, he suggested, would help address systemic grievances and improve compliance by fostering cooperation between different stakeholders.

Responding to these concerns, Chief Minister Neiphiu Rio reassured the House that plugging leakages in GST deductions and collections remains a top priority for his government. He firmly stated that no government can survive or function effectively without taxes, and therefore, revenue generation through GST must be taken seriously. He appealed to both businesses and citizens to comply with tax requirements in a timely manner, emphasizing that such compliance would directly contribute to strengthening the state’s economic foundation.

Rio’s remarks reflected his view that GST is not merely a fiscal tool but a vital instrument for the state’s long-term economic health. His call for turning tax compliance into a mass movement indicated a vision where financial responsibility is shared by all sections of society. This approach, he argued, would not only reduce revenue leakages but also ensure that Nagaland builds a resilient and self-sustaining economy in the years to come.