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GST to impact Telangana roads
State Government\'s ambitious plan to develop double-lane road network connecting all mandals and four-lane roads in all district headquarters on the stretch of nearly 12,000 km were hanging in balance.
Govt now pays 5% VAT on sanctioned project
Hyderabad: State Government's ambitious plan to develop double-lane road network connecting all mandals and four-lane roads in all district headquarters on the stretch of nearly 12,000 km were hanging in balance.
Thanks to the single tax regime - GST (Goods and Service Taxes) which comes into force from July 1 this year, the proposed road projects are set to put nearly Rs 3,000 crore to Rs 4,000 crore additional burden on state exchequer.
The government has chalked out a plan to develop 12,000-km road network as double-lane out of 16,800 km single road network at the cost of Rs 13,400 crore in three years. Under road development programme, double-lane road laying works are already taken up in 140 mandals in the first phase.
This year, Roads and Buildings (R&B) have prepared plans to widen 4,058 km of existing roads into double-lane roads at a cost of Rs 5,634 crore. It will also take up construction of 357 bridges at a cost of Rs 1,538 crore. Some major bridges taken up as part of this included four bridges across the Godavari, and five across Manair, two each over Krishna and Manjeera rivers and one over Pranahita.
A top official of R&B Department told The Hans India that at present, the government is paying 5 per cent VAT on the estimation of each road project sanctioned to the contractors for the development.
Once the GST comes into force, the government would have to pay 18 per cent tax as GST to the tax collecting agency. As a result, the project cost would be increased abnormally and the estimations for the conceived projects would have to be revised. It is mandatory that the R&B department should pay 5 per cent VAT to state Commercial Taxes department on every project estimation before taking up the works.
In 2017-18, the government earmarked Rs 5,000 crore budget for R&B. Under the GST regime, the government needs to shell out Rs 700 crore additionally for 13 per cent tax additionally on each estimation.
The Telangana government has already brought to the notice the Union government about the additional tax burden on state exchequer under the GST. If the Centre rejects the plea to maintain status quo in tax collection, the R&B department would have to revise all estimations of the road development projects and pay taxes in accordance with the Act.
Apart from this, the increased cost of raw material like steel, cement bituminous etc under the GST would put heavy burden on contractors and the government should also address the financial implications faced by the agencies in the estimations, the sources said.
