Extend compensation beyond 22: Buggana Rajendranath Reddy

Amaravati: Finance minister Buggana Rajendranath Reddy raised several issues which impact the revenues of the state, the taxation powers of the state under federal structure enshrined in the Constitution and also the functioning of trade and industry in the state in the 45th GST Council Meeting held at Lucknow on Friday under the chairmanship of Union finance minister Nirmala Sitharaman.

Rajendranath Reddy was accompanied by revenue special chief secretary Dr Rajat Bhargava, chief commissioner of state taxes Ravi Shankar Narayan Sudagani and senior officers of the commercial taxes department.

The finance minister said with regard to extension of GST compensation beyond 2022, that the revenues of the state under GST do not match the revenues under the earlier VAT regime. 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 its introduction was around 10 per cent only necessitating provision of compensation every year.

Moreover, the two pandemic years — 2020-21 and 2021-22 — saw plummeting of tax revenues of the state, including GST, seriously affecting the developmental and welfare activities. Though it is predicted that the revenues of the state will rebound next year, such rebound may not be to the extent of 14-15 per cent growth. Therefore, AP requires additional funds in the form of compensation, too, from the Centre. He stressed the need to extend the compensation beyond 2022 also for a few more years assuring 14 per cent growth every year.

The other issue raised by the finance minister is the rate of tax on Kadapa slabs. He stated that as per the existing notifications and the proposals of the Fitment Committee constituted by the GST Council, the rate of tax applicable to polished Kadapa slabs is 18 per cent. In case of similar low end stones such as Kota stone of Rajasthan, the rate of tax applicable to polished stones is five per cent only except those with mirror finish. He pointed out that Kadapa slabs are not amenable for mirror finish. He requested the council to consider the case of Kadapa slabs favourably and reduce the tax on to 5 percent by way of clarification.

The other goods and services on which Rajendranath Reddy requested the Council to reduce the rate of tax were solar power plants and on job work in liquor manufacturing activity. He requested the council to reduce the tax rate to 5 per cent on them and also to make a study whether to treat spice water on par with aerated drinks which attract 28 per cent GST + 12 per cent compensation cess.

The finance minister also met the Union finance minister personally and submitted representations on all the issues and also requested her to release the compensation dues to the State of AP for the period till August, 2021 expeditiously as the state is hard-pressed for revenues to carry on its welfare measures.

Chief Minister of UP Yogi Aditya Nath also attended the meeting.