Reiterating his stand that the State government will have no option but to take up a legal struggle if the GST on ongoing projects was not further reduced, Chief Minister K. Chandrasekhar Rao has said that it was on State government’s persuasion that the Centre brought down the GST on works contracts from 18 to 12 per cent at Saturday’s meeting of the GST Council but the government was still not satisfied.
At an official meeting to discuss the contents of the letter proposed to be written by him to Prime Minister Narendra Modi on the GST at 12 per cent on works contracts, Mr. Rao hoped that the Centre will reconsider the issue and concede the State’s request to bring the tax further down below 12 per cent. Otherwise, it will be legal struggle. The letter will incorporate detailed analysis of the loss arising out of the Centre’s stand.
A release later said the meeting noted that the State government will suffer a huge loss if the GST was paid on the contracts at 12 per cent. The problem was not peculiar to Telangana alone but many other States.
Mr. Rao announced on the occasion an uncompromising struggle till the rate on the contracts was reduced below 12 per cent. He questioned how a post-GST rate from July 1 was justified on projects that were already grounded by June 30 because the estimates for such projects and allocation of budget was based on the old rate at 5 per cent. It was not possible to revise them, a release said.
The meeting was attended by Chief Secretary S.P. Singh, Telangana transmission and generation corporation chairman D. Prabhakar Rao, Special Chief Secretary (Irrigation) S.K. Joshi, Advisor to government G.R. Reddy and several IAS officers and Engineers-in-Chief of various wings.
They discussed at length the impact of 12 per cent tax on ongoing works in various departments. The officials presented the initial estimates to Mr. Rao to enable him to write the letter but it was postponed with a view to support the communication with accurate statistics on works involving irrigation projects, Mission Bhagiratha, housing, power and highways. They will fine tune the figures after an in-depth analysis at another meeting on Monday. After that it was decided that Mr. Rao will send the letter on behalf of the State government with complete details, the release added.
Mr. Rao asked the officials to come up with details about the cost of ongoing works department wise, cost of works already completed and the balance of works, financial impact on account of 12 per cent levy of GST and the overall burden to the State government. They must also suggest how to overcome the burden. All of this will take a couple of days.
The Chief Minister reminded them that the State government had been reminding the Centre not to impost high taxes on works contracts. The same was insisted at GST Council meetings, including on Saturday.
It was not proper to levy a new GST rate on Kaleswaram, Palamuru - Ranga Reddy and Sitarama projects which were grounded a year or two ago, Mission Bhagiratha two years ago and Yadadri and Bhadradri plants much earlier. The housing schemes were also going on for two to three years. Some of them were implemented with external funding. Their agreements were also finalised before GST came into force and it was not possible to revise them.
eom/