Telangana to lose ₹7,000 crore due to GST rationalisation: Bhatti Vikramarka

Deputy Chief Minister and Finance Minister Mallu Bhatti Vikramarka said that Telangana’s revenues would be hit by over ₹7,000 crore due to the recent proposals of the Central government to rationalise the Goods and Services tax (GST).

Raising strong objections against the Centre’s unilateral move at a meeting, convened under the aegis of the Karnataka government in New Delhi on Friday, Mr. Vikramarka said that Telangana stands to lose at least ₹5,100 crore from rate cuts, and nearly ₹7,000 crore, if all losses were considered, including 15% GST revenues from the rationalisation.

The meeting was attended by Finance ministers and senior representatives from Karnataka, Punjab, Kerala, Jharkhand, Tamil Nadu, Himachal Pradesh, West Bengal, apart from Telangana.

Comparing the pre-GST and post-GST revenues, Mr. Vikramarka pointed out that Telangana’s GST revenues have grown at only 10% CAGR up to 2024-25, against the 18% CAGR under VAT earlier. Had VAT continued, the State would have earned ₹69,373 crore in 2024-25. Under GST, revenues are just ₹42,443 crore. With GST accounting for 39% of the State’s own tax revenues, he said that any reduction in rates hurts States much more than it does the Centre. The GST-to-GSDP ratio has already declined from 3.07% in 2022-23 to 2.58% in 2024-25, and rationalisation will push it down further.

The Minister said that Telangana was willing to support reforms if a compensation framework to protect States’ revenues was created so that they can continue welfare and development programmes. And also ensure that any tax reduction or exemption directly benefits the poor and middle class, rather than luxury sectors.

Finance ministers from Punjab, Kerala, Tamil Nadu, Jharkhand and West Bengal echoed Telangana’s concerns, with Karnataka Revenue Minister Krishna Byre Gowda stressing the need for “structural safeguards” to prevent States from sliding into fiscal distress.

Another meet on Sept. 3

Addressing the media after the meeting, Mr. Vikramarka announced that another round of deliberations will be held at Tamil Nadu Bhavan on September 3 to further explain the States’ positions. “We will raise these concerns formally in the upcoming GST Council meeting. This is not just an issue for Opposition-ruled States but also NDA-ruled States facing revenue losses,” he said.