The Telangana State government has served a notice on the Reserve Bank of India, asking for Rs 200 crore VAT arrears from 2005 to 2012 on production of currency coins in the mint compounds located in Saifabad and Cherlapally in the city.

This is being viewed as a tit-for-tat move by the Telangana government in response to the RBI deducting Rs 1,247 crore from the Telangana government’s account in May this year towards payment of I-T arrears.

The RBI had secured an exemption from paying VAT from the Kiran Kumar Reddy government in 2012. But the Telangana government now wants to recover the arrears. The Union finance ministry purchases metals used for coins and supplies to the RBI to mint coins.

The YSR government in undivided AP had treated this as a “commercial transaction” between the Centre and the RBI and imposed 5 per cent VAT from 2005 to 2012.

The Saroornagar division of the Commercial Taxes department served the notices to the Union Finance ministry, RBI and mint compounds, seeking payment of VAT arrears.

Following this, RBI officials recently met commercial taxes minister Talasani Srinivas Yadav and ministry officials and sought a waiver of arrears on the ground that VAT had been exempted in 2012 and no VAT had ever been collected by any state government from the mint compounds located in Noida, Mumbai and Kolkata.