Telangana opposes GST on neutral alcohol

Telangana State on Friday objected to the moves by the Union government to bring extra neutral alcohol under the purview of GST.

Finance Minister T Harish Rao, participating in the 43rd GST council meeting chaired by the Union Finance Minister Nirmala Sitharaman in virtual mode, said the Central government was generating high revenues in the form of cess and surcharges and the States were left only with excise, petrol and diesel. 

The Central government got 18 per cent of the revenue through cess and surcharges in the last budget. Of the Rs.22.17 lakh crore budget, Rs.3.99 lakh crore income was generated from cess and surcharges, he said.

Pointing out that States were losing 41 per cent of the income amounting to Rs.1.64 lakh crore from cess and surcharges collected by the Central government, Harish Rao said Telangana was losing 2.102 per cent of income amounting to Rs.3, 438 crore every year. 

As requested by the Ministers of all States, neutral alcohol should be exempted from GST since States will not be able to generate revenue,



Harish Rao said, and requested that a decision should be taken to permanently exempt neutral alcohol from GST.

He said Telangana was the only State which was receiving low GST compensation. “Expenditure has gone up and revenue collections have dipped because of Covid-19 and for the safety and health of the people in the State, the government has been spending huge amounts of money on health care,” he said.

Under these circumstances, the Centre should increase the FRBM limitations from three per cent to five per cent, he said, adding that Telangana received Rs.2,638 crore IGST dues last year. He requested the Centre to clear the pending dues considering the financial constraints of the States.

The Minister said that since race courses were situated in the State, membership should be given to Telangana in the Group of Ministers (GoM) constituted by the Ministry of Finance to examine the issue of valuation of services provided by casinos, race courses and online gaming portals and taxability of certain transactions.