1,257-cr windfall for Telangana from Delhi

By: B. Krishna Prasad

In a major relief to Telangana government, the Centre has agreed to return Rs 1,257 crore that was directly credited to the Income Tax department from the Telangana government’s account towards payment of I-T arrears of the erstwhile Andhra Pradesh Beverages Corporation Limited.

Concurring with the argument presented by the Telangana government that the I-T department cannot deduct the amount owed by a public sector undertaking from the funds of the state government, the Centre has agreed to return the amount to Telangana. The file related to returning the amount has been cleared by the Union finance ministry’s department of revenue and the finance secretary.

“The file is now with finance minister Arun Jaitley who promised to clear it in a day or two. After that it would take couple of days to realize the amount,” said a senior official in the Telangana government’s finance department. With the sudden withdrawal of funds by the I-T department in June this year, the finances of Telangana had suffered a body blow.

In response to the withdrawal of funds, the state government despatched a delegation led by minister for panchayat raj and information technology KT Rama Rao to meet Jaitley in New Delhi and present the state’s case. KTR explained to Union finance ministry officials that the tax dues were related to erstwhile Andhra Pradesh and the sharing of assets and liabilities has not been completed between two states. Chief Secretary Rajiv Sharma, who was in the delegation, pointed out to the finance minister that the state government was not an income tax assesse and I-T department action was unwarranted.

“We also made it clear that if the Centre does not set the matter right, similar actions may affect GoI funds if any PSU falls behind in tax payments,” said a senior official in the state government.

Meanwhile, the Telangana government had also moved the Hyderabad High Court and received a stay on the notices issued by the I-T department. Sources in the state finance department said the court case actually forced the Centre to rethink on the issue and subsequently decide to return the money.

It was a year ago that the Income Tax department served notices to Andhra Pradesh Beverages Corporation in the then united Andhra Pradesh, seeking tax dues worth Rs 2,900 crore. After the bifurcation, the corporation was taken over by the Telangana government and the Centre was informed about the development. In June, RBI deducted Rs 1,257 crore from the Telangana government’s kitty and credited the amount in the account of the I-T department.

Source: The Times of India

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