TS shudders at double-hit

Government wants postponement of GST by at least six months

The Telangana state government is worried over the implementation of Goods and Service Tax from April 1, 2017 in the wake of adverse impact on its revenues on account of demonetisation.

The government plans to seek its postponement by at least five-six months.

It is concerned that demonetisation had resulted in huge revenue loss for the state government and if GST came into force from April 1, less than four months away, its revenues would be further hit as it would lose the power to impose various taxes on its own.

The government wants clarity over how the states would be compensated for revenue loss on account of demonetisation by the Centre in the remaining four months of this fiscal before bringing in the GST regime. Finance minister Etela Rajender, who attended the GST Council meet in New Delhi on Friday and Saturday, laid out the the state’s concerns over demonetisation and GST.

Despite the Centre releasing `1,813 crore to Telangana state on Friday towards tax devolution for December, which is in excess of `404 crore over its due share, it failed to restore the confidence in the state government.

Normally, the state receives `997 crore every month from the Centre towards tax devolution. In November, the Centre released `584 crore resulting in a shortfall of `413 crore. The government raised severe objection over this.

To compensate, the Centre released `997 crore for November along with last month’s arrears of `413 crore. Surprisingly, it also released an excess of `403 crore, totaling `1,813 crore this month, which brought relief to the government that was reeling under financial crisis following demonetisation.

In the meeting, Telangana state officials felt that it would be better if the Centre took all states into confidence by addressing demonetisation issues first before implementing GST. Even the finance ministers of non-BJP states were learnt to have expressed a similar view stating that the time is not ripe to implement GST from April 1 without addressing demonetisation issues.

They brought to the notice of Union finance minister Arun Jaitley that all the state governments had supported GST with the hope that the Centre would compensate states for the revenue losses suffered on account of GST.

The Centre’s sudden announcement on demonetisation has changed the entire situation with financial condition of state governments becoming delicate.