GST rate cut may cost Telangana ₹7,000 crore yearly
HYDERABAD: The Telangana commercial taxes department has estimated that the state exchequer could lose about ₹7,000 crore annually due to the reduction of Goods and Services Tax (GST) slabs.
Officials said their preliminary estimates, submitted to the state government, suggest a revenue loss of ₹5,000–₹7,000 crore depending on sales in key sectors. The government sought details on the financial impact of rationalising GST slabs and prepared the assessment.
Steel, auto sectors hit hardest
According to officials, the decision of the Centre to rationalise GST rates will significantly affect sales in major sectors in Telangana, particularly iron and steel and automobiles. Fast-moving consumer goods (FMCG), textiles and cement are also expected to bring in lower tax revenues.
Officials said even if sales rise in some segments, overall revenue to the government is certain to fall. They added that iron and steel and cement industries are considering price hikes following the rate cut, especially with large-scale housing projects such as Indiramma housing expected in the state.
Data collection challenge
Officials admitted that compiling estimates has been difficult since GST does not provide detailed sales data the way the earlier Value Added Tax (VAT) system did. Under VAT, dealer codes provided itemised sales information. In GST, authorities are having to collect data at the field level from each dealer to assess revenue impact, they said.
