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KCR puts GST brakes on new projects in Telangana
Within 24 hours after Chief Minister K Chandrasekhar Rao raised a banner of revolt against the Union government for enhancing taxes on developmental projects under the new single tax regime -- GST, the Telangana state government has put all the developmental projects, approved in the 2017-18 financial year, on hold.
Mission Bhagiratha and Mission Kakatiya to go on slow pace
Hyderabad: Within 24 hours after Chief Minister K Chandrasekhar Rao raised a banner of revolt against the Union government for enhancing taxes on developmental projects under the new single tax regime -- GST, the Telangana state government has put all the developmental projects, approved in the 2017-18 financial year, on hold.
The government has instructed officials to go slow with regard to ongoing irrigation projects like Mission Bhagiratha and Mission Kakatiya while putting on hold the sanctioned projects like road network, two-bedroom houses, construction of integrated district head offices and camp office for MLAs in the assembly constituencies for about a month.
All the Secretaries of the departments concerned were instructed to stop giving approvals for new projects immediately. The state government has been demanding that the GST Council, and Union Finance Minister Arun Jaitley to exempt developmental projects from 12 per cent GST slab.
Since the estimation for all projects were prepared based on the estimations before the enforcement of the GST, an official said that the cost of all project works would shoot up under the new tax regime. With the reduction of the slab from 18 per cent to 12 per cent, the burden on the government would come down by about Rs 13,000 crore. But unless it is brought to 5 per cent tax slab it would be very difficult to meet the cost escalation, he added.
In 2017- 18, Rs 5,000 crore budget was earmarked for Roads and Buildings. Under the GST, the government would have to shell out Rs 700 crore to Rs 800 crore additionally on the projects. It would also put heavy burden on irrigation sector which has been allocated Rs 20,000 crore this year.
Works at some projects sites have already been halted as the contractors and private agencies are pleading with the government to allow them to enhance the estimations or given an assurance that it would bear the additional cost on account of GST.
Similarly, the cost of two-bedroom housing scheme, Mission Bhagiratha and Mission Kakatiya would also go up abnormally. Under these circumstances, officials said the only option before the government is to stop the works till the Centre resolves the issue.
If the Centre turns down the request to reduce tax to 5 per cent from 12 per cent, the government would have to relook into the cost of all the proposed projects and revise the estimations to face the impending financial burden in the future.
