HYDERABAD: The Telangana state government has strongly opposed the Centre's attempt to impose 'backdoor GST' on liquor in the name of 'extra neutral alcohol' or ENA.
Finance minister T. Harish Rao who participated in the GST Council meeting chaired by Union finance minister Nirmala Sitharaman through video conferencing on Friday, raised strong objection over Centre's proposal of including under GST alcohol's single most crucial and expensive raw material — extra neutral alcohol or ENA — the ingredient that is distilled.
ENA accounts for nearly 35 per cent of the total liquor production cost. Harish Rao questioned what the states would get if the Centre took 35 per cent of liquor cost under GST. He said the Centre's move was nothing but imposing GST on liquor through 'backdoor methods'.
Harish Rao also sought waiver of GST on medicines and equipment being used for Covid-19 treatment and said if waiver was not possible, the Centre should at least consider reduction of GST from 12 per cent to 5 per cent. He also demanded an increase in FRBM (Fiscal Responsibility and Budget Management) limit from 3 per cent to 5 per cent to enable the state government to borrow more to tide over Covid-19 financial crisis.
Liquor and petroleum products were kept out of the ambit of GST when it was enforced in the country in June 2017 following severe concern expressed by states over losing of their own tax revenue, if they are brought under GST.
But the Centre now proposes to impose GST on ENA, which was strongly opposed by Harish Rao.
Harish Rao said states were already losing Rs 1.64 lakh crore to the Centre due to imposition of cess, surcharge on fuel and Telangana state was losing Rs 3,429 crore to the Centre every year.
He demanded that the Centre withdraw the proposal to include ENA under GST permanently as states the will suffer huge losses if it is imposed.
Harish Rao brought to the notice of the Council that Telangana was one of the states getting lowest GST compensation from the Centre. He said Telangana received Rs 2,638 crore IGST funds last year. He demanded immediate release of Rs 218 crore IGST to the state.
He also urged the Centre to include Telangana in the GST Group of Ministers (GoM) to recommend better valuation of services of casinos, online gaming portal and race courses for levying GST since the state has race courses.
