The 21st meeting of the GST Council held here on Saturday decided to expand definition of the work contracts to address the plea of the Telangana Government to provide tax relief on the ongoing projects being executed for the benefit of people.
Union Finance Minister Arun Jaitley, who briefed the media about the deliberations that had taken place and decisions taken at the meeting, stated that the Telangana Chief Minister had written to him with a request to reduce the tax on work contracts from 18% proposed initially and, accordingly, it was reduced to 12%. Further, it was decided to expand the definition of work contracts to extend the benefit to works such as execution (construction) of government buildings.
On repeated questions pointing out that the Telangana Government had been demanding that it be lowered further to 5%, the Union Minister said: “The government would have to pay money to contractors if it is reduced further”. The calculations being made on the issue were not correct, he said, adding that the State Government would also get equal share in the tax revenue. Telangana Minister for Finance Eatala Rajender, speaking to reporters later, said the State Government had made one more representation on the issue of work contracts to reduce the tax burden on people-centric programmes such as Mission Bhagiratha, Mission Kakatiya and irrigation projects and was hopeful that it would be taken up at the next meeting of the council on October 24.
The minister admitted that the issues related to granite and beedi industries had not come up for discussion at the meeting since they had to be examined by a panel and, based on its recommendations, it would come up before the council.
Protest conducted
Earlier in the day, several farmers and weavers federations, agro industries representatives, and activists of the Left parties staged protest at Hitex crossroads, demanding that the Centre reduce tax on all goods and services linked to the poor and the middle class. Several activists of the Communist Party of India (CPI) led by its national secretary K. Narayana were taken into custody by the police when they tried to march towards Hitex Convention Centre. Mr Narayana stated that imposition of higher GST rate on economic activities involving low-income groups was an attack on their livelihoods.
Higher GST rate on sector like granite, textiles, furniture, and beedi ould have an adverse impact on the economy as had been evident already. While the economic growth rate of China was surging, that of India was on the slowdown and decline due to GST impact.