TS, AP oppose tax on petrol and diesel in the GST list

Hyderabad: The two Telugu states on Friday opposed the Centre’s plan to include the tax on petrol and diesel in the Goods and Services Tax (GST) list.

Participating in the 45th GST council meeting held in Lucknow, TS finance minister T. Harish Rao and his AP counterpart B. Rajendranath Reddy pointed out that tax on petroleum products and liquor was the major revenue source for the states. “It was agreed upon by the Centre, time and again, that it would not bring these into the purview of GST,” the two states said.

The BJP-ruled states too opposed the move even as the council chairman informed the meeting that the issue, though not on the agenda, was brought up for discussion in view of a Kerala High Court order.

“I brought to the notice of the council that Telangana increased VAT on petrol and diesel only once in the last seven years. This is in sharp contrast to the Centre effecting tax hike on the two products 20 times during this period,” Harish Rao told this newspaper.

“We also appealed to the Centre to remove the burden of tax on raw cotton from the farmer by passing it on to the industry at a subsequent level,” he said.

The TS finance minister expressed happiness over Telangana’s revenue gap being the lowest compared to all other states. The joint secretary to finance made a presentation on the states’ performance.

Harish met Union finance minister Nirmala Sitharaman and urged her to immediately release the Rs 450 crore due in the Backward Region Development Fund and the Rs 210 crore that was diverted to the Consolidated Fund of India by the Centre.

The TS finance minister reminded the Centre that the Comptroller and Auditor General too had recommended the release of funds to the states.

The AP finance minister sought extension of GST compensation to the states beyond 2022. The revenues of the state, under GST, do not match with the revenues under the earlier VAT regime, he said.

While the state recorded an average annual growth of 14 to 15 per cent for three years prior to introduction of GST in 2017, the average growth of GST in the last four years after introduction of GST was around 10 per cent only, necessitating a provision for compensation every year, he said.

Rajendranath Reddy also urged the Centre to reduce the current tax of 18 per cent on polished napa slabs, treating them on par with other types of stones like the Kota stone of Rajasthan. He also pleaded for a tax cut on solar power plants and job work in liquor manufacturing activity and for bringing them under the five per cent category.