HYDERABAD: The Central government’s recent decision to slash corporate tax for new and existing companies will result in a reduction of Rs 1,400 crore in Central devolution to Telangana, Chief Minister K Chandrasekhar Rao has said.
Rao, in his reply to the debate on the Appropriation Bill in the Assembly on Sunday, said the decision to cut corporate tax would have an adverse impact on the state budget too. As there is a possibility of the state not getting Rs 1,400 crore from the Centre, it may not realise the estimated revenue from the Centre in the state Budget, the chief minister said.
“The actual size of the budget is Rs 1.36 lakh crore. However, we have added Rs 10,000 crore, taking the total size to Rs 1.46 lakh crore. This Rs 10,000 crore will be realised through the sale of land. We may or may not get the estimated sum by selling land,” he added, and went on to say that the Rs 10,000 crore, to be accrued through the sale of land, would be diverted to the State Development Fund (SDF), and if any department falls short of funds for development, Rs 500 crore or Rs 1,000 crore would be diverted to them from the SDF.
According to official sources, due to the cut in corporate tax, the Centre may lose Rs 1.45 lakh crore. If 5% of this is attributed to surcharges, the net reduction in the divisible pool of taxes would be around Rs 1,37,750 crore, they said. Of this, the states’ share of 42% would be about Rs 57,855 crore.
For Telangana, the reduction would be around Rs 1,409 crore from the Central government, the sources explained. The state’s share in Central devolution of taxes is 2.437%.
The Centre had already reduced Rs 840 crore in Central tax devolution. Further, there was a reduction of Rs 600 crore under Centrally Sponsored Schemes (CSS). The reduction of corporate tax would further reduce the revenues of the state government, which would have an adverse impact on the state Budget, the sources said.
‘BJP, Cong to blame’
The CM alleged the Congress and the BJP governments at the Centre had cut the power of the states. “If Congress and the BJP came to power, their local leaders will not have any voice,” he said
Central government may lose Rs 1.45 lakh crore
Due to the cut in corporate tax, the Centre could lose Rs 1.45 lakh crore, official sources said. If 5% of this is attributed to surcharges, the net reduction in the divisible pool of taxes would be around Rs 1,37,750 crore
Rs 10000 crore
added to the state budget, taking the total size to Rs 1.46 lakh cr. The Rs 10,000 cr will be realised through the sale of land