GST rollout on July 1: Telangana pegs 15% Centre share on service tax

HYDERABAD: Telangana government on Sunday unanimously passed Goods and Services (GST) Bill, 2017. The final bill excluded liquor and petroleum products from the gambit of GST, allowing the state to decide the tax rates for these commodities. GST will roll out in state from July 1.
With approval of draft GST bill on March 31, Centre asked states to pass the State GST bill in respective legislatures.Following the Centre's request, the Telangana government passed the bill, subsuming tax laws related to Value Added Tax (VAT), entertainment tax, entry tax of goods, luxury tax, entry tax of vehicles, horse races and betting tax, rural development act and advertisement tax.
“There will be one tax and that will be GST. Though final tax rates are yet to be known, we are hopeful of increased revenue with introduction of GST,“ said finance minister Etela Rajender.
Government is expecting 15 per cent share of service tax revenue from the Centre. With annual service tax growth rate of over 35 per cent, the finance minister said there would be increased flow of funds to the state. The government expects Rs 16,201 crore revenue for 2015-16 financial year, for 2017-18 the total revenue expected will be Rs 21,055 crore and for nine months the state should get Rs 15,791crore.
Of total tax revenue of Rs 31,117 crore last year, about Rs 16,000 was through VAT, which will be subsumed by GST.
The state is at the receiving end as compensation was promised only for states which report growth rate less than 14%. Ever since TRS government took charge, the state recorded more than 15 per cent growth rate. On tax collections, state reported 21 per cent growth in 2016-17, which is highest in the country. “GST compensation will be paid if the growth in tax revenue is less than 14 per cent, a condition that is not much beneficial for the state. Manufacturing states like Telangana will give more to Centre than it collects as tax,“ said a senior official in finance department.