Hyderabad: The Telangana government on Friday impressed upon the 14th Finance Commission about the need to grant a special package and a higher share in Central taxes for the newly-created state because of an expected erosion of tax revenue in Hyderabad after the division of Andhra Pradesh and funds required to develop the state, nine out of 10 districts of which were backward.
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“Despite its backwardness, an erroneous impression has gained ground about the revenue potential of Hyderabad in particular and Telangana in general. The higher revenue collections in Hyderabad was entirely because of the practice of all major VAT dealers paying their tax in Hyderabad for sales taking place all over the state and not because of higher revenue potential (because of this), there will be erosion of tax base in the short to medium term,” Chief Minister K. Chandrasekhar Rao said in his presentation to the Finance Commission.
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Explaining further, he said the revenue potential of Telangana was quiet limited as majority of the districts in the state were economically backward. “Nine out of the 10 districts in the state are covered under the Backward Regions Grant Fund,” he said.
