The State government has expressed displeasure over the “unscientific” manner in which the Centre brought major work like irrigation projects, Mission Bhagiratha, Mission Kakatiya and two bedroom houses under service tax purview which is set to impose additional burden of ₹19,200 crore on the State exchequer.
“Service tax on major public work is unscientific. It is like the government taxing itself,” Finance Minister Eatala Rajender said. The State government has resolved to take up the matter with the Centre at the meeting of the GST Council slated ahead of the launch of GST network on Friday.
The Finance Minister also found fault with the Centre for bringing cigarettes and beedis under same tax slab of 18%. “Bringing beedis and cigarettes under the same slab is not justified. Beedi workers will be severely affected by the hike in tax,” he said. The State had represented its reservations on 35 issues relating to the implementation of GST regime of which the Centre had so far resolved seven issues.
Chief Minister K. Chandrasekhar Rao had addressed letters to Prime Minister Narendra Modi and Union Finance Minister Arun Jaitley for speedy resolution of the issues which included exemption sought for weavers, beedi workers, granite industry and water grid & irrigation. “Hopefully, the remaining issues too will be resolved positively,” he said. He said the State was fully geared up for the implementation of the new tax regime and it was anticipated that the GST network would not have any major impact on the State’s tax revenues. The State’s revenue through service tax was currently pegged at around ₹7,000 crore and that from the Central excise was around ₹ 5,800 crore.
“The anticipated gap in the tax revenues is likely to be bridged by the rise in service tax collection which is likely to be around 20%,” he said. He, however, refused to elaborate on the likely net impact on the State’s tax revenues. More than 80% of the traders/dealers were already registered under the new regime and the remaining were expected to be enrolled before July 5.
There was also no proposal to divert the existing staff of the Commercial taxes department to other departments as was done in some States.
The government was actively working on the redeployment of the staff after taking into account steps like scrapping the check posts for less human interface.
The Minister cautioned traders against resorting to hiking prices of the commodities.
