As the Telangana CM Revanth Reddy and his team set out to present the first full State Budget for his government soon, Reddy has a clear task ahead of ensuring inflow of revenues to strengthen the State finances.
Reddy recently has asked his officials to take necessary measures to increase the revenue in the current financial year 2024-2025 compared with the last year. In a recently held a review meeting of the Revenue Department, he has given a free hand to departments to rework on measures wherever required for generating more revenues. The CM instructed the officials to strive hard to achieve the annual revenue goals mentioned in the Vote on Account.
Reddy ordered his officials to set monthly revenue targets to achieve annual goals as he felt performance of revenue generating wings is not satisfactory till June this year.
Most importantly he asked them to plug loopholes in the GST collections. In recent months, GST collection has fallen for Telangana. In the data released for March it clocked 12 per cent growth year on year, for April, it was 11 per cent growth year-on-year and for May, also it remained stagnant at 11 per cent.
As Professor Suresh Govindapuram, IFMR Graduate School of Business, Krea University, said, “Ee don’t have data for the last month. Further, the revenue collection from petroleum products and excise sales has fallen despite the election in the last few months. Here, we need the role of government to look into these issues and create a smooth, transparent and accountable system.”
Since expectations are that Reddy government will present a public welfare Budget in a few days, his team may have to consider some things for better financial management. “GST- Strict rules are to be followed for those evading taxes and to see that they do it regularly. Also, all the eligible businesses should register under GST,” he said.
In fact, the Chief Minister has already cautioned his team about it.
Taxes and duties
On the excise front, the State must ensure proper system is in place to check the illicit sale of liquor and strict vigilance on illegal brands. “The taxes on the higher brands can be increased. Have better enforcement and a new license system to curb irregularities,” Suresh said.
On Land and Stamp duty, he said the State has recently increased land registration rates and they can further have stringent rules to avoid tax invasions and illegal land pooling. “Further, tax the more on-the-rise buildings and multi complexes. The government can also take an opportunity for booming real estate and invest in this sector to get more revenues,” he added.
Tax/VAT on petroleum products, collections have to be transparent. At his review meeting “In view of the decrease of revenue from the VAT on the sale of Petrol and Diesel, the CM asked the officials to look into the possibility of revising the tax on Aviation fuel to compensate for the revenue loss.”
The previous State government had brought down VAT on ATF to one per cent from 16 per cent. The VAT on petrol is at 35.20 per cent and diesel 27 per cent, currently.
Non-tax revenue are another potential area to increase the revenue in terms of fines and fees, Suresh said. Public debt is another important concern and the government should restructure its public debts with low interest rates and longer repayment options, he said.
There is also a thinking that Telangana should demand more funds from the Central government.
