Telangana government feeling the pinch of economic slowdown

Now options before govt, which is tied down by GST regime, are to increase liquor sales, market value of lands, stamp & registration charges

Published: 12th September 2019 03:20 AM  |   Last Updated: 12th September 2019 03:20 AM   |  A+A-

Telangana CM KCR

Telangana CM K Chandrashekhar Rao (File picture |EPS)

Express News Service

HYDERABAD:  The worst fears of the State government came true, two years after the introduction of Goods and Services Tax (GST). In the GST regime, the States will not have any freedom to augment their resources by increasing the taxes.Even though the State government is feeling the pinch due to the economic slowdown in the country, its hands are tied in the GST regime. Right from the beginning of the GST regime in July, 2017, the State government has been stating that its “hands are tied up”. 

Now, the Central grants, tax devolutions and others were decreased considerably. The economic slowdown is hitting the State revenues badly. The Finance Department officials are fearing that there will be around 10 per cent cut in Central devolution this year. “In the first quarter, there is a four per cent cut in Central Tax devolution to State. It may touch 10 per cent this year,” an official said.

With the cut of four per cent Central Tax devolution, the State lost Rs 840 crore, in the first quarter of this financial year. “We are expecting there to be a 10 per cent cut in Central Tax devolution,” an official said. 
In the vote-on-account Budget, the State estimated that its share in Central Taxes will be Rs 22,835.30 crore. In the Budget, the State revised the estimate to Rs 19,718.92 crore, a shortage of Rs 3,116.38 crore in the share of Central taxes.

Now, the options left before the State are to increase the sales and sale price of the liquor, increase the market value of lands and enhance the stamps and registration charges. However, the officials are wary of increasing stamp duty. “We have to study the options and take the decision carefully. Increase in stamps and registration charges might result in a decrease of revenues. It will result in further economic slowdown,” an official felt. 

If the State encouraged the consumption of liquor by increasing its sales abnormally, it will invite the wrath of the women. However, the top officials of the Finance Department blamed the Centre for its faulty slabs in GST for reduction in revenues for both the Central government and the State government. “Certain items which have 20 per cent tax are brought under 18 per cent slab in GST. That is the main reason for the lower revenues,” an official pointed out.

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