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