‘Ex­empt on­go­ing projects from GST to stop in­cur­ring addl ex­pen­di­ture’

Sunday Express - - TAMIL NADU/SOUTH -

“THE GST will im­pose ad­di­tional bur­den on the ex­che­quer. As the state’s an­nual bud­get can­not be re­vised now, the chief min­is­ter wants to re­quest the PM to ex­empt the on­go­ing projects from the GST ,” sources dis­closed.

How­ever, the GST Coun­cil on Satur­day con­ceded the state gov­ern­ment’s de­mand par­tially and re­duced the tax rate on pub­lic works from the ex­ist­ing 18 per cent to 12 per cent.

As per the ini­tial de­ci­sion, the GST Coun­cil fixed 18 per cent tax on pub­lic works, which would bur­den the state gov­ern­ment to a tune of `19,200 crore on ir­ri­ga­tion projects, road con­struc­tion works and the flag­ship ini­tia­tives of Mission Bhagi- ratha and con­struc­tion of 2BHK houses. With the re­duc­tion of tax rate from 18 to 12 per cent now, the state can save about `6,400 crore. “We will get a ben­e­fit of not less than `6,000 crore,” com­mer­cial taxes prin­ci­pal sec­re­tary Somesh Ku­mar, who at­tended the Coun­cil meet­ing along with in­dus­tries min­is­ter KT Rama Rao, told Ex­press.

In fact, the state gov­ern­ment has been ar­gu­ing that im­pos­ing a heavy tax on pub­lic works would be a bur­den to sev­eral state gov­ern­ments. Te­lan­gana gov­ern­ment has been de­mand­ing that the tax on these works should be 12 or 5 per cent.

Ac­cord­ing to sources, sev­eral other states did not un­der­stand the im­pact of GST on pub­lic works. Somesh Ku­mar, who rep­re­sented TS, said he spoke to of­fi­cials of other states and ex­plained to them the ad­verse im­pact on the re­spec­tive state gov­ern­ments due to high tax rate. Af­ter the GST Coun­cil meet­ing, Union Fi­nance Min­is­ter Arun Jait­ley an­nounced that the pub­lic works un­der GST will be taxed at 12 per cent with in­put tax credit. “If all the states ral­lied be­hind TS, the GST on pub­lic works would have been re­duced to 5%,” said an of­fi­cial.

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