The revenues of Telangana from GST have plummeted against estimates drawn up by the government under the erstwhile Value Added Tax (VAT) each year since the former regime came into force in the State on July 2017.
In the first year, that is, 2017-18, the loss was ₹1,135 crore which went up to ₹7,566 crore in 2018-19 and then peaked to ₹17,248 crore in 2019-20.
The loss was already ₹8,000 crore, which was 34% of the estimates in the first four months of the current financial year, according to Finance Minister T. Harish Rao.
It was precisely the downtrend in tax collections, which the State government was unable to digest as evident from Mr. Rao's despair that Telangana would have been at the top of the table at the national level if it had continued with VAT and not joined the GST regime.
True to his words, Telangana ranked first in the country in sales tax - Gross State Domestic Product (GSDP) ratio in 2016-17, a year before GST was implemented. The actual revenue of the State in that year was ₹35,231 crore with a growth rate of 22.59%. Telangana was bracketed with Maharashtra, Gujarat, Karnataka and Tamil Nadu as States that together exported 70% of goods and services of the country.
A year further before, that is, 2015-16, Telangana was sixth in the country with a growth of 17.81% in tax receipts. It pushed Andhra Pradesh to eighth position from sixth in 2014-15. Telangana's revenue from VAT in that year was ₹29,846 crore
The revenues nosedived after that, as Mr. Harish Rao says, and the State lost ₹26,000 crore from tax revenue since then. The State joined GST for a national cause to ensure tax liberalisation but the Centre dealt it a raw deal. The State paid to the Centre revenue from levy of cess to the tune of ₹18,032 crore while getting back as devolution only ₹3,200 crore.
Telangana had raised concerns during preliminary discussions on GST implementation that it may have to yield its predominant position if it transited to new system but pinned hopes on the Centre coming to its rescue by the Act of Parliament. Now, the State government has blamed Centre for undermining its status as a high revenue-earner.
