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Telangana apprehensive over GST loss
Though the Telangana State government supports the much delayed GST (Goods and Services Taxes) Bill which was adopted by Rajya Sabha on Wednesday, the government has its own fears on the quantum of RNR (Revenue Neutral Rate) percentage on the State revenues.
Hyderabad: Though the Telangana State government supports the much delayed GST (Goods and Services Taxes) Bill which was adopted by Rajya Sabha on Wednesday, the government has its own fears on the quantum of RNR (Revenue Neutral Rate) percentage on the State revenues.
“RNR in the GST is defined as the tax rate which seeks to achieve and garner similar revenue under the newly implemented tax structure as collected from taxes which are sought to subsume and were in force prior to the implementation of the new tax structure.
Thus, the basic objective of the RNR can be described to prevent the new tax structure having negative revenue implications,” according to a top official from State Commercial Taxes department.
The State government has recently conducted a detailed study of the repercussion of the RNR on the State income. The top official says that the more the RNR percent, the more benefit the State will get.
If the RNR is below 18 per cent, government will lose revenue worth thousands of crores rupees every year.
If it is between 25 to 28 per cent, State will suffer a loss of hundreds of crores rupees. However, the officials declined to reveal the details of the magic figure. “At what rate the RNR percentage will be adopted is of the utmost important for the State,” he said.
The RNR would be uniform in all States and will be finalised by the GST Council only after the adoption of the Bill by the Parliament. The other worrying factor is the compensation of inter-State tax on manufacturing to the states.
It is also one of the important contentious issues as there was no clarity on how the Centre would reimburse. The ambiguity on the Centre’s assurance to the states that revenues lost under GST Act would be compensated for five years was still continuing.
The officials said that if the GST Bill protected all the interests of the State, the government would adopt the same in the State Assembly as it was mandatory that 15 out of 29 states should enact the Bill for its implementation across the country.
As per the schedule, the Act would come into force from April 2017. Before that, all the State governments should be equipped with required IT applications.
