20,000 more dealers in Telangana to be brought under GST

Textile shops observing bandh against GST in Hyderabad.

Textile shops observing bandh against GST in Hyderabad.   | Photo Credit: K.V.S. GIRI

State may lose ₹5,000 crore revenue

The State government is expecting that 20,000 more dealers will be covered by GST when it comes into force after Friday midnight but the revenue from the new regime is likely to be ₹5,000 crore less compared to Value Added Tax collected in 2016-17.

Last year, the government had earned ₹37,000 crore from VAT but the upcoming revenue from GST was expected to be only ₹16,000 crore while another ₹16,000 crore was likely from the sale of liquor and petroleum which would be out of the GST purview.

Sources said the government cannot expect compensation from Centre to make up for the ₹5,000 crore revenue loss because the State will be above the 14 per cent threshold fixed for the purpose. Only those States which have a growth rate below 14 per cent after GST implementation will be eligible for compensation.

Chief Secretary S.P. Singh told The Hindu a 2 % to 3% increase in value of government works is expected because service tax and Central Excise exemption given to them was removed in GST. A glimmer of hope for the State government, however, was the increase in the dealer base to come under tax net. There were 2.30 lakh dealers taxed to VAT and turnover tax in the State but their number was expected to go up by 20,000. About 90% of the expected 2.50 lakh dealers will remain in State GST as their annual turnover is below ₹1.5 crore. The remaining 10 per cent, whose turnover is above ₹ 1.5 crore, will be assessed by the Centre. The Centre and State tax nets in 50:50 ratio as per an agreement hammered out at the GST Council meeting.

There could be about 1.50 lakh dealers to be taxed under GST on basis of turnover. There will be another 35,000 service tax dealers who will migrate to GST while 20,000 textile dealers who were not in VAT will be fresh entrants to tax. Only readymade garments were in VAT while other products in textiles business were not taxed. These categories apart, government expected nearly 50,000 fresh registrations for GST to avail input tax credit, sources added. Since a huge database of business-to-business transactions will be created in GST, all those who were not paying taxes will be forced to join. The expansion of dealer base was despite many traders being left out as the ceiling of annual turnover for exemption has been raised from ₹7.5 lakh to ₹20 lakh.

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Printable version | Feb 21, 2020 7:21:27 PM | https://www.thehindu.com/news/cities/Hyderabad/20000-more-dealers-in-telangana-to-be-brought-under-gst/article19166491.ece

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