Telangana Warns of ₹7,000 Cr Loss Under GST Rationalisation, Dy CM Urges Compensation Mechanism

New Delhi: Telangana Deputy Chief Minister and Finance Minister Mallu Bhatti Vikramarka have raised 15 key concerns on behalf of Telangana, and noted that though the State supports rationalisation, the proposed changes could cause heavy financial losses.

Telangana has recorded only a 10% CAGR in GST revenues up to 2024-25 as compared to 18% CAGR under VAT. Had the VAT continued, the State’s revenues would have been Rs 69,373 crore, but under GST, revenues stood at Rs 42,443 crore, he pointed out.

The deputy CM participated in the consultative meeting of various States on ‘GST Rate Rationalisation’, held at Karnataka Bhavan, New Delhi, under the aegis of the Government of Karnataka.

He highlighted that the State could lose Rs 7,000 crore—nearly 15% of its GST revenues – due to the proposed rationalisation, which would severely impact welfare schemes as more than 80% of Telangana’s revenues are already committed to welfare expenditure.

“In a federal democracy, States must be consulted on such critical policy decisions. Telangana, being a newly formed State with high financial needs, cannot afford unilateral decisions that restrict fiscal freedom.

A fair and balanced tax system is essential for development,” he noted and urged the Centre to address two critical issues before finalising any changes by establishing a “compensation mechanism” to safeguard the States’ revenues and ensuring that tax reductions and exemptions genuinely benefit the poor and middle-class citizens.

The meeting was attended by Finance Ministers and representatives from Karnataka, Punjab, Kerala, Jharkhand, Tamil Nadu, Himachal Pradesh, and West Bengal. Talking to newsmen later, Bhatti Vikramarka said that another meeting will be held at Tamil Nadu Bhavan on September 3 to consolidate the States’ views before presenting them at the upcoming GST Council meeting.