Contending that the levy of the Goods and Services Tax (GST) on projects executed for the State governments was a point of “serious concern,” Tamil Nadu on Thursday urged the Centre to exempt the work contracts executed for State governments from the purview of GST.
While speaking at the pre-budget meeting of Finance Ministers of all States and Union Territories in Delhi, Deputy Chief Minister O. Panneerselvam, who also holds the Finance and Planning portfolios, said, “In a way, it is a tax on States, paid from taxes collected from the people. It is also adversely affecting the financial capacity of the States to execute works.”
Mr. Panneerselvam, in the presence of Union Finance Minister Arun Jaitley, also reiterated the need to include the revenue received from levy of cesses and surcharges in the divisible pool of resources to the States. The Deputy Chief Minister, who urged the Centre to finalise the site for the proposed AIIMS in Tamil Nadu, also referred to the memorandum submitted seeking financial assistance to the tune of ₹5,255 crore for various causes.
Unfortunately, Tamil Nadu had “lost out badly due to reduction of horizontal devolutionary share” and hence the overall devolution to the State has shrunk leaving the State government to fill the resource gap for centrally-sponsored schemes from its own resources, he pointed out and urged for a special ad-hoc grant to such States by way of a special compensation to ensure equity in Central allocation.
The Deputy Chief Minister also flagged the reduced budgetary allocations to schemes like the Rashtriya Krishi Vikas Yojana (RKVY), National Urban Livelihood Mission (NULM) and the National Rural Livelihood Mission (NRLM). Also, since many Ministries have not been releasing funds to the States, there was a huge backlog in release of Grants from the Centre, he pointed out.
Mr. Panneerselvam also insisted the Centre to raise the standard deduction permitted for the personal income tax from ₹1.50 lakh to ₹2.50 lakh, in order to boost the consumption demand and raise economic growth rates.
Referring to various schemes, Mr. Panneerselvam also hoped that the schemes be announced in the budget and funds allotted for implementation.
