Telangana flags ₹7,000 crore loss risk at GST rate meeting, demands compensation

Hyderabad: Telangana Deputy Chief Minister Mallu Bhatti Vikramarka warned that the Centre’s proposed GST rate rationalisation could cut nearly ₹7,000 crore from the state’s revenues, hitting welfare and development programmes.

Speaking at a consultative meeting at Karnataka Bhavan in New Delhi on Friday, Bhatti raised 15 major concerns. He said Telangana supported rationalisation in principle but demanded safeguards to protect states from steep financial losses.

Telangana GST rate rationalisation debate highlights state losses

Bhatti noted that Telangana achieved only 10 percent CAGR in GST revenues up to 2024-25, compared to 18 percent under VAT. He said the state would have earned ₹69,373 crore under VAT in 2024-25, but GST brought in only ₹42,443 crore.

He explained that GST makes up 39 percent of Telangana’s own tax revenues, which makes any rate cut more damaging for states than for the Centre. “Telangana is set to lose at least ₹5,100 crore under the proposal. With other losses, the figure climbs to nearly ₹7,000 crore, or about 15 percent of GST revenues,” he said.

The Deputy Chief Minister added that over 80 percent of Telangana’s revenues go to welfare spending. He demanded a compensation mechanism and said tax cuts must directly benefit poor and middle-class families.

Centre urged to consult states

Bhatti criticised the unilateral decision on GST rate rationalisation. He argued that cooperative federalism required proper consultation with states, either directly or through the GST Council.

Ministers from Karnataka, Punjab, Kerala, Jharkhand, Tamil Nadu, Himachal Pradesh, and officials from West Bengal also attended the meeting.

Bhatti announced that another meeting will be held at Tamil Nadu Bhavan on September 3 to build consensus before the GST Council session. He added that Chief Minister A. Revanth Reddy had already surveyed flood-hit areas in Telangana and will soon send a relief report to the Centre.

Participated in the consultative meeting on GST Rate Rationalisation at Karnataka Bhavan, New Delhi.

Telangana expressed serious concerns that the proposed rate changes may lead to losses of nearly ₹7,000 crore, adversely impacting welfare & development programmes.

Emphasised… pic.twitter.com/Ned4FsvTer

— Bhatti Vikramarka Mallu (@Bhatti_Mallu) August 29, 2025