Middle East war may dent TG revenues

Hyderabad: With the US-Israel-Iran war showing no signs of respite, its ramifications on the economic front are raising concerns in Telangana state. For, revenue from the VAT through petrol and diesel sales may fall if fuel supply is affected in the days ahead. Should supply of cooking gas for commercial needs be restricted (like in Maharashtra) or disrupted (Karnataka), it would negatively impact the GST collections. The state government is collecting 5 per cent GST on domestic cooking gas and 18 per cent on commercial LPG supply.

Amidst the worsening situation on the war front, the State authorities are apprehensive of falling revenues as it will aggravate the financial crisis attributed largely to mounting and legacy debt burden.

The State Commercial Taxes Department is closely monitoring the sales of petro products and supply of cooking gas, which generate state’s own tax revenue (SOTR) and GST respectively to the state.

Officials said that the LPG gas supply for commercial needs “slowed down” due to some restrictions imposed by the Union government. The impact of the restrictions and shortage of domestic cooking gas on revenue generation is being ascertained. It is too early to put together statistical data relating to eventual fall in the revenues.

The data is being compiled with the support of state Civil Supplies Department -- the official agency of the cooking gas distribution in coordination LPG gas supply agents. Officials said that VAT collections from the sale of fuels add up to around Rs 1,000 crore every month.

The GST collections from the sale of cooking gas would be Rs 100 crore per month. Sources said that a slight decline in the GST was reported after imposing restrictions on LPG supply for commercial and domestic needs. The officials said that slowdown in hotel and restaurant business due to shortage of cooking gas would also affect the regular tax collection from the sale of food.

The cascading effect of the shortage of LPG would be more on the GST collections if the current crisis is not addressed instantly. The State Civil Supplies Department is constantly monitoring the LPG supply in the municipal corporations and big towns, where there is more commercial activity than in rural areas. The larger goal is to minimise the negative impact of the cooking gas shortage on the local economy.