State to take Rs.5000 crore hit annually due to GST

Telangana state is expected to incur revenue loss of Rs.5,000 crore annually, when Goods and Services Tax (GST) comes into force. - Sakshi Post

Hyderabad: Telangana state is expected to incur revenue loss of Rs.5,000 crore annually, when Goods and Services Tax (GST) comes into force beginning April 1, 2017.

The silver lining being that the GST provides for the states to be compensated by the central government, for a period of five years. However, the state will incur losses in the vicinity of Rs. 5,000 crore, even after five years, financial analysts say. It may be noted that the Telangana government earned a revenue of Rs.32,000 crore through Value Added Tax (VAT) in the previous year and in the current year it is expected to earn anywhere between Rs.36,000 crore to Rs.40,000 crore.

The silver lining being that the GST provides for the states to be compensated by the central government, for a period of five years.

Analysts arrived at the Rs.5000 crore number after taking into consideration several factors. For instance, once the GST comes into force, there will be no tax on agricultural produce. Consequently, there will not be income from this important source. Additionally, income from inter-state CST tax will also discontinue.

However, questions remain if the compensation from the central government will be prompt.

whatsapp channel


Read More:

Advertisement
Back to Top