The decisions taken at the Goods and Services Tax Council meeting held in New Delhi on Friday brought considerable relief to Telangana State. One of its main demands to reduce the GST rate on certain components of public works was conceded and brought down to 5%.
Telangana government has been pressing the Centre for reducing the GST rate on public works from 12% to 5%. Earlier, the rate was reduced from 18% to 12%. The State represented to the Centre that at least the rate on certain components related to earth work be reduced to 5%.
Labour component
The Council decided to bring down the tax rate on all works involving high labour and low material component to 5%. The 7% reduction in rate would benefit the works related to irrigation canals, works taken up under the Mission Kakatiya and road works. The relief is expected to be about ₹1,000 crore.
Speaking to The Hindu , Principal Secretary, Commercial Taxes, Somesh Kumar said that the threshold for the composition scheme, which allowed small traders to pay a standard tax rate, was increased from ₹75 lakh turnover to ₹1 crore. The small traders would also be allowed to file tax returns once in three months, instead of monthly filings of three tax returns.
Granite policy
There was positive response to the request to reduce the rate on granite and it was indicated that a granite policy would be formulated in the next GST Council meeting at Guwahati in November. However, the rate on low cost ‘Napa’ stone was brought down to 18% from 28%
On the request to reduction of GST rates on hotels and restaurants, the Council agreed to take a decision in the next meeting. Overall decisions of Friday’s meeting will directly benefit people in the State.
Tax revenues
The State whose tax revenues picked up in September under the new GST regime and touched ₹3,241 crore is not likely to get any compensation as its revenue growth was quite steady. The growth would touch 18% soon as had been the case before GST.
The 22nd GST meeting chaired by Union Finance Minister Arun Jaitley was attended by Finance Minister Eatela Rajender, Commercial Taxes Principal Secretary Somesh Kumar and other officials.
