GST NOT TO HIT LPG PRICES IN TS, AP

‘1 India, 1 tax’ means policies like TS-iPASS aren’t enough

GST will not have any impact on the price of LPG cylinders in TS and AP. The two Telugu states had levied 5% VAT in the previous tax regime.

The TS state government has been seriously exploring an alternative mechanism to attract industrial investments post-GST regime.

In the earlier VAT regime, the government offered tax incentives to lure industries, which would not be possible in GST regime due to taxes being uniform across the country.

The government is now looking at offering fiscal incentives to industries based on number of jobs each industry provides and quantum of manufactured products sold in the state.

The state government feels that this will encourage job creation in the state besides fetching revenues for the state government from consumption of the products manufactured by the respective industries.

The TS government introduced a new industrial policy ‘TS-iPASS’ in June 2015 wherein online approvals are being given within 15 days in self-certification mode.

The policy received good response as over 4,000 companies were approved within two years accounting for investments worth `73,000 crore.

Under TS-iPASS, the government offered VAT reimbursement, Central Excise tax concession, Income Tax concession, stamp duty reimbursement, land cost rebate, land conversion cost, power cost reimbursement, investment subsidy, interest subsidy, reimbursement of infrastructure development costs etc.

However, with uniform taxes prescribed for the entire country under GST, the state government cannot reduce taxes for industries.

Besides, it is also in a quandary over how to continue tax rebates for the 4,000 companies that invested in the state after being attracted by the tax incentives offered for a period ranging from five to 10 years.

Industries minister K.T. Rama Rao said, “Telangana is not the only state facing this issue. All the states are facing the same situation. It’s not even a week since GST roll-out, but its implications are slowly being felt on each sector in different ways. It’s a learning process. We hope the Centre will take all states along and find a solution to this problem. After all, industrial growth is important to sustain higher GDP levels and job creation.”

One such alternative being mulled by TS government is to provide fiscal incentives like financial assistance to industries on the basis of each job provided to locals in the state.

Since consuming states benefit in GST regime, the state government wants to extend financial assistance to those companies which sell most of their product within the state.