VIJAYAWADA: Andhra Pradesh is unlikely to get any compensation for loss in revenue due to implementation of the Goods and Services Tax (GST).
The base year for calculating the revenue of a State would be 2015-16 and growth of 14 per cent would be taken for calculating the likely revenue of each State in the first five years. The States that have achieved 14 per cent growth rate would not be eligible for the compensation. Andhra Pradesh, on average, has already achieved 14 per cent growth rate, and has been targeting to achieve 15 per cent growth this financial year. Consequently, the State may not get any compensation for loss in revenue over next five years, sources say.
The State government has estimated that the revenue loss would be around Rs. 4,000 crore per annum due implementation of the GST. It could be on higher side also. In any way, the State would not be eligible if the basis fixed by the GST Council were to be considered.
Strikingly, States such as Gujarat, Tamil Nadu, Karnataka and Maharashtra would be eligible for the compensation as their growth rate is far below the 14 per cent fixed by the Council. Their growth is less compared to Andhra Pradesh as “they have high base growth”. But, other States, including Andhra Pradesh, have a low base growth rate, which deprives them of compensation, source say.
With several States suggesting changes in the model GST law and compensation formula, the GST Council meeting scheduled for November 25 has been postponed to December 2-3.
There is no agreement between the States and Centre on cross empowerment also. The States have been suggesting the Centre that the State Governments’ tax authorities should have administrative control over all the tax payers whose turnover was less than Rs. 1.5 crore irrespective of the goods or services that they deal with. And, regarding the dealers whose turnover is over and above Rs. 1.5 crore, the administration of tax payers should be allocated between the Central and State government authorities in proportion to the number of VAT dealers and Service Tax assessees dealt at present by the state and the Central Government Tax authorities respectively.
