Worried about the negative impact of the GST on the State revenue, the Telangana Government has adopted two pronged strategy. On the one hand the State has appealed to the Centre to exempt its major programmes like 2 BHK housing scheme for the poor, irrigation projects, and Mission Kakatiya and Mission Bhagiratha from the GST. If these programmes come under the GST, the State will have to pay more than Rs 19,200 crore.
Ahead of the rollout of the GST by the Centre on Friday night, Chief Minister K Chandrasekhar Rao, has written to Finance Minister Arun Jaitley, seeking exemption to certain sectors.
On the other hand the Telangana Government has took a leaf out of the book of neighbouring Andhra Pradesh to completely avoid paying any GST on the license fee of bar and liquor shops.
While, liquor is out of the purview of the GST, the State Government has to pay 18 per cent GST on the bar and liquor shop license fee.
The Governments of both the Telugu States have come with a devious method to save crores of rupees every year by merely changing the nomenclature. They have changed the name of license fees of bars and liquor shops to excise tax which will not come under GST.
While, Telangana Government has promulgated an ordinance, Andhra Pradesh Government has reduced the license fee to mere 2 per cent. Under this move if license fee was Rs 1 crore, it will be reduced to only Rs 2 lakh and remaining 98 lakh will be collected as excise duty. With this the State will have to pay GST only on Rs 2 lakh per license and save a lot of money.
With this measure Telangana Government is expected to save Rs 36 crore till October when the new excise year will commence.
The State Government is expected to issue new rules for the next excise year when fresh licenses for the bars and liquor shops will be issued to continue to avoid GST.
Another issue of concern for Telangana is that with a GSDP of 17.9 per cent, it was not going to get any compensation from the Centre. Only the States with GSDP of 14 per cent or less will get the compensation.
Telangana Finance Minister Estela Rajender said that the service tax collection in the State was expected to increase by 20 per cent and collect Rs 20,000 crore under GST.