Hyderabad: Worried about the negative impact of the GST on the state revenue the Telangana government has adopted two pronged strategy. On the one hand the state has appealed to the Centre to exempt its major programs like 2 BHK housing scheme for poor, irrigation projects, and Mission Kakatiya and Mission Bhagiratha from the GST. If these programs come under the GST that state will have to pay more than Rs192 billion (Dh10.90 billion).

Ahead of the roll out of the GST by the centre tonight Chief Minister K Chandrasekhar Rao has written to the finance minister Arun Jaitley seeking exemption to certain sectors.

On the other hand the Telangana government has taken a leaf out of the book of neighbouring Andhra Pradesh to completely avoid paying any GST on the license fee of bars and liquor shops.

While alcohol is out of the purview of the GST, the state government has to pay 18 per cent GST on the bars and liquor shop license fee.

The governments of both the Telugu states have come up with a ingenious method to save millions of rupees every year by merely changing the nomenclature. They have changed the name of license fees of bars and liquor shops to excise tax which will not come under GST.

While Telangana government has promulgated an ordinance, Andhra Pradesh government has reduced the license fee to a mere 2 per cent. Under this move if license fee was Rs10 million, it will be reduced to only Rs200,000 and remaining Rs9.8 million will be collected as excise duty. With this the state will have to pay GST only on Rs200,000 per license and save a lot of money.

With this measure Telangana government was expected to save Rs360 million till October when the new excise year will commence.

The state government was expected to issue new rules for the next excise year when fresh licenses for the bars and liquor shops will be issued to continue to avoid GST.

Another issue of concern for Telangana was that with a GSDP (gross state domestic product) of 17.9 per cent, it was not going to get any compensation from the Centre. Only states with GSDP of 14 per cent or less will get the compensation.

Telangana finance minister Estela Rajender said the service tax collection in the state was expected to increase by 20 per cent and collect Rs200 billion under GST.