Delays in release of central tax funds hit the Telangana finances

RICH’ Telangana seems to have begun facing financial problems. The State government is not getting its due share of money on time through Central Tax devolution.

Published: 14th September 2017 02:13 AM  |   Last Updated: 14th September 2017 08:54 AM   |  A+A-


Express News Service

HYDERABAD: ‘RICH’ Telangana seems to have begun facing financial problems. The State government is not getting its due share of money on time through Central Tax devolution.
This is because of the lower revenue collections at the Centre and the teething troubles being faced by both the Centre and the State after the introduction of the Goods and Services Tax (GST). Sources said the State is finding it difficult to meet its expenditure commitments for development and welfare programmes. It is also struggling to honour its commitment to pay Pay Revision Commission arrears to its employees, post-GST.

Normally, the State would get `1,000  crore to `1,200 crore as Central tax devolution on the first of every month. However, the Centre recently changed the practice for Central tax devolution, as the Centre itself is reportedly facing financial troubles. Now, the Central tax devolution funds are reaching the State on the 15th or 20th of every month. It may be delayed further in future, sources said. 

Further, Centre decided to give only a proportionate share of Central taxes to the States. “For instance, if the State is supposed to get `1,000 crore every month, the Centre is not sending the same to the State, in the changed scenario. If the Central government’s revenues fall, then the Central tax devolution to the State also decreases proportionate to the Centre’s income,” an official in the Finance department told Express. 

The Centre has not been making devolution of all taxes every month, sources said. The State has been facing problems with Central tax devolution for the last year and the problem has been compounded by dip in Centre’s revenues due to introduction of GST. It means that the State does not know the quantum of Central tax devolution it will receive every month. “It is difficult to meet the expenditure commitments of the State for various development programmes,” an official admitted. 

Fall in revenue
The State government’s revenues came down in August. Compared to the revenue received in August 2016, the state revenues dropped by close to `160 crore. However, TS is expected to get between `600 and `800 crore as its share of IGST for this period. 

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