Hyderabad: Deputy Chief Minister Bhatti Vikramark Mallu said on Saturday that the Goods and Services Tax (GST) Council has agreed to maintain status quo on taxation of Aviation Turbine Fuel (ATF) under VAT.
Bhatti, who is also Finance Minister, participated in the 55th meeting of the GST Council chaired by Finance Minister Nirmala Sitharaman in Jaisalmer, Rajasthan on Saturday.
In the meeting, it was proposed to bring Aviation Turbine Fuel (ATF) under the ambit of GST. It is taxed by the states under the relevant state VAT Act. The deputy chief minister opposed the proposal as the province currently has limited sources of revenue.
Moreover, ATF is derived from crude oil, which is currently taxed under VAT. He, therefore, requested the Council to maintain the status quo on the issue, which was supported by many other states. This was agreed by the Council of Ministers.
In the meeting, there was a detailed discussion on the rate of tax levied on delivery services by delivery partners including restaurant services through electronic commerce operators. Since these are complex issues related to taxation, the Deputy Chief Minister suggested that further study should be done on this issue, keeping in mind fairness in implementation.
Therefore, he proposed to form a committee of officials to investigate this matter and take a decision based on its report. The Council accordingly constituted a committee of officials, including officials from Telangana, to inquire into the matter and submit a report.
On the issue of closure of the Group of Ministers (GoM) on analysis of GST revenue constituted in 2019, Bhatti informed the council that Telangana was in favor of recommending continuation of the Group of Ministers, with suitable reorganization of the GoM as a study. State-wise and regional revenues are invaluable for making informed policy decisions. The proposal made by the Deputy Chief Minister has been approved by the Council of Ministers.
On the issue of recovery of excess ad hoc IGST apportionment made in previous years, the Committee of Officers (CoO) presented various options for its recovery. Bhatti informed the council that despite the ad hoc distribution to the states as per the base rate of revenue for the financial year 2015-16, as negative balances in IGST accumulated over time, recovery was proposed from the states.
However, the recovery is proposed on the basis of recent revenue which does not match the previous distribution formula. The Deputy Chief Minister requested the council to make the recovery of the additional ad hoc distribution made so far on the basis of the base rate of the revenue of the financial year 2076-77. To prevent financial difficulties to the states at the end of the financial year, he requested that the recovery, if any, be made only in the next financial year.
During the meeting, Andhra Pradesh requested for permission to levy one percent cess on B2B transactions in the state under GST to meet the expenses for reconstruction and rehabilitation due to recent floods.
Bhatti also said that Telangana also suffered huge losses due to the same calamity and requested that similar arrangements be made in Telangana as well. On the recommendation of the GST Council, the matter has been referred to the Group of Ministers (GoM), which also includes Telangana.