Hyderabad: Telangana on Thursday stated that it supports the proposed rate rationalisation as part of the GST reforms, but with a proper compensation mechanism. To achieve this, the state proposed that either the present compensation cess be continued, with the amount collected fully allocated to the respective states.
Deputy Chief Minister Mallu Bhatti Vikramarka, who attended a meeting of the Group of Ministers (GoM) on GST rate rationalisation in the national capital, said the proposal of rate rationalisation and reduction of tax burden is always welcome.
He, however, said that it must be balanced by ensuring that the revenues of the states are protected. Otherwise, welfare schemes for poor people and the middle class, as well as infrastructure projects, will suffer.
The GoM, constituted by the GST Council, was tasked with reviewing proposals on exempting life and health insurance services from GST and on rate rationalisation.
Pointing out that a GoM already exists to specifically examine rate rationalisation, Vikramarka suggested that the latest proposals be referred to that panel for detailed study before recommendations are made to the GST Council. He said that proposals relating to compensation cess should also be placed before the same GoM to allow comprehensive recommendations.
The deputy chief minister proposed increasing the membership of the GoM on rate rationalisation to ensure wider representation from states.
The meeting also discussed exempting all individual life and health insurance policies, along with related reinsurance. Vikramarka welcomed the move, saying it would expand insurance penetration, but stressed the need for a mechanism to ensure benefits reach policyholders rather than insurance companies.
“It is only in such a situation that the purpose will be served, though states will lose some revenue that could have been used for welfare schemes,” the deputy chief minister said.
He added that the Telangana government already provides insurance cover to 95 lakh families.
