Fall in fuel prices affects Telangana revenue

Hyderabad: Fall in petrol and diesel prices has cast a shadow on Telangana State economy. Some of the revenue generating departments could not achieve the high targets in the last eight months.

Although the Commercial Taxes Department achieved 12 percent “over and above” revenues when compared to last year till this November, the department has been under pressure to achieve the high target that was fixed for this financial year. According to official sources, it could generate only Rs 20,900 crore revenue in the last eight months as against the target of Rs 36,000 crore in 2015-16 financial year.

Before the beginning of the 2015 financial year, the Finance Department has increased revenue target of this department by 30 per cent from Rs 27,000 crore in the previous year based on crude oil prices in the international market. Over 70 per cent of revenue was being generated from the sale of petroleum prices. And the remaining tax revenue comes in the form of entertainment tax, professional tax and VAT collected from the sale of other products like garments and gold.

Continuous fall in the crude oil prices contributed a loss of around Rs 3000 to Rs 4000 crore revenue in the last two quarters, an official said.

The Government has been collecting 35.20 per cent as VAT on petrol and 27 per cent on diesel. “When the fuel prices are high, VAT being collected from the sales will also be high,” the official said. The fuel prices had gone down from 15 percent to 20 percent this year.

“Finance Department has been setting targets without consulting the Commercial Taxes Department every year. The issue was also brought to the notice of the government and requested to hold a joint meeting before finalising revenue targets,” the official averred.

However, the stringent steps taken by the department contained revenue loss to some extent by plugging loopholes in tax collections from other products.

Another important revenue generating department, Excise and Prohibition, has succeeded in achieving its targets. So far, the department earned Rs 7,700 crore (including VAT) out of Rs 12,000 crore target and it is confident that it would meet the target comfortably before the end of financial year. The revenue growth from the Stamps and Registration and Transport departments was also increased by 30 and 20 per cent respectively in the last eight months.

Meanwhile, Finance Minister E Rajendar instructed all revenue generating departments to achieve the revenue targets set by plugging loopholes in tax collections by the end of 2015-16 financial year.

Prior to the preparation of 2016-17 budget proposals, the minister held a meeting with the officials of state Commercial Taxes, Excise and Prohibition, Transport, Registration and Stamps and Mining departments and reviewed progress in tax collection and revenue generation.

He also asked the officials to keep a vigil on the rampant smuggling of no duty paid liquor and illegal transportation of sand from neighbouring States which incurred huge revenue loss to the state exchequer. The minister wanted all the departments to prepare plans for the 2016-17 budget, by taking into account the revenues and expenditures for a full year after the division of state.