GST eats into Revenue of Municipalities

Source: The Hindu     Apr 13, 2018

Major municipalities in the State, including the Greater Hyderabad Municipal Corporation, have reported losses in revenue from an unexpected quarter.

The urban local bodies suffered losses to the tune of Rs 100 crore after the entertainment tax was brought under the ambit of the Goods and Service Tax since the introduction of the new tax regime since July 1 last year. The GHMC is the biggest sufferer losing around Rs70 crore from the 368 of the total 460 theatres across the State under its jurisdiction and Warangal was next with Rs10 crore. The other municipal corporations suffered losses of more than Rs10 crore.

According to officials, entertainment tax collected from the theatres was hitherto routed to the municipal areas through the Treasury without much difficulties and the funds used to be utilised for taking up various programmes, including infrastructure development and amenities, under their respective jurisdiction. Introduction of the GST had, however, ensured that the amounts collected through the GST would go to the account of the Central government.

The Central government would in turn devolve the funds to respective States proportionately and the government had to take a decision on the devolution of the received funds which makes it a tedious process. “Tax hitherto used to come to the municipal bodies by furnishing a request to the Treasury. The process has to cross several stages now. The Central government will take its own time for devolving funds to the State and the State in turn will take a decision on distributing the funds down the level,” a senior official said.

Senior officials of the GHMC said though the corporation had represented to the Central government about the projected losses it would suffer consequent on the introduction of the GST, there was no response so far. Commercial Taxes department officials too expressed their helplessness in the issue claiming that it was for the Centre to take a decision on the issue.