GST regime: A muted response in Hyderabad

K Jaya, 60, of Gandhinagar in Hyderabad has heard about the transition to the Goods and Service Tax (GST) regime. She, however, noticed no significant change in her bills. “I have read in the papers it would help consumers. But I haven’t seen any price drop as yet,” she says.

Ramana, owner of a kirana shop, says the wholesale market is yet to see a change. “We have not seen any drop in prices. They are still trading in old stocks,” he says. He is yet to register under GST.

At malls, retail outlets have seen a muted response from buyers since July 1, when the new tax regime was launched. Acknowledging a relatively lesser crowd on a Friday evening, an executive of a multi-national retail chain admits a drop in footfalls after GST was introduced.

The responses sum up the ambiguous first six weeks into the nation-wide uniform tax regime. While consumers say they have not seen any benefits, traders are wary of the ‘complicated’ compliance procedures. Awareness too seems to be limited.

Nitin Parekh, a member of trade chambers in Telangana and Andhra Pradesh, agrees the GST long-term direction is good for people. But in the short-term, there’s confusion.

“Things are yet to settle. Filing of returns is cumbersome. It’s actually a nightmare. They say it can be done in no time. But there are inordinate delays even if you sit with experts,” he says. “It looks like they (authorities) are seeking information not just on sales revenues, but also want details such as salaries paid to the employees. It will ensure transparency in the long run but expecting a sudden transformation is a bit too much,” he points out.

The State government is ambivalent. It’s happy that half of its revenues are intact because of exclusion of petrol and excise taxes from the GST purview. Together, they contribute 48 per cent of the total revenue collection.

And, there will be one more layer of scrutiny on the tax payers in the form of Central agencies. “Because it is one single tax, they will be watching as much as we do, leaving little scope for evasions,” a top government official said.

The base for Telangana’s GST computation is put at ₹16,200 crore, which was its tax revenue in 2015-16. If the State doesn’t get it’s assured growth of 14 per cent over this base, then the Centre compensates it.

At the same time, the State Government is unhappy too. It’s actually seething with anger because of the huge tax burden on the Government’s projects in irrigation, housing, power and road projects. The Centre might have reduced the GST on works contracts to 12 per cent from the 18 per cent that was initially suggested.

But “When we made budgetary allocations, we factored in the then prevailing 5 per cent rate. It would be tough revising the costs,” Chief Minister K Chandrasekhara Rao said during a recent GST review meeting in Hyderabad.

The Government pegs a tax burden of ₹600 crore on the Mission Bhagiratha (which aims at providing drinking water to every household) project alone. It fears more tax outgoes in other projects such as tank restoration scheme Mission Kakatiya and two-bed- room scheme.

After a high-level review meeting, the State Government has decided to write to Prime Minister Narendra Modi. “We hope they will listen to us and make the changes to bring down the rate. Or, we will have to consider legal option,” the Chief Minister said during the same meeting. The veiled threat is quite a change from Rao’s initial reaction when he was among the first Chief Ministers to welcome the GST.

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