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Telangana: VAT, a big deal
August, 10th 2013

Emotions apart, ownership of Hyderabad has become the most contentious issue in the ongoing tussle for Telangana’s statehood. Not without reason. Hyderabad generates about 40 per cent of the total value-added tax (VAT) collections in the State.

Barring Hyderabad, the Andhra-Rayalaseema region leads the table in VAT collection.

Being home to the headquarters of almost all the major business houses, the five Commercial Taxes offices in Hyderabad (Abids, Charminar, Punjagutta, Secunderabad and Begumpet) collect the majority of the State’s VAT revenues.

To assuage the feelings of the Andhra-Rayalaseema people, Digvijay Singh, in-charge of the Congress Party’s Andhra Pradesh affairs, has said that Hyderabad will be the joint Capital of the two States for 10 years.


The coastal areas have come of age and are showing signs of faster growth. “Excluding Hyderabad city, business activity is concentrated in coastal Andhra, where about 15 per cent of all sales tax collections take place. Tax collection in Telangana is about eight per cent and Rayalaseema is just about three per cent,” noted the Srikrishna Commission report. The Commission, which considered the figures for 2008-09, pointed out that about 75 per cent of the Rs 22,000 crore of sales tax (or VAT) was collected from Hyderabad alone. The city’s five offices clocked Rs 8,959 crore in financial year 2012-13 as against Andhra Pradesh’s total VAT collections of Rs 20,041 crore. The Andhra-Rayalaseema region has a VAT base of Rs 6,131 crore, followed by Telangana with Rs 4,951.

This VAT revenue, however, does not include contributions from major public sector units, petro products and liquor. These three heads alone generate revenues of Rs 21,027 crore, taking the total VAT revenues to Rs 41,068 crore.

“We don’t have district-wise figures for these three heads. So, it is not easy to compare figures here,” a top Government official told Business Line.


But the contribution of Hyderabad would be much more as many PSUs are in Hyderabad.

Also, consumption of petrol is much higher in the State capital, which also houses the Rajiv Gandhi International Airport.

The figures for 2011-12 reflected an almost similar pattern. Telangana (without Hyderabad) collected Rs 4,786 crore as against Rs 5,585 crore for the Andhra-Rayalaseema region. The Hyderabad area clocked Rs 7,398 crore in Andhra Pradesh’s total collection of 17,769 crore.

Contribution from petro-products, liquor and major public sector units in 2011-12 was at Rs 17,244 crore.

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