Hyderabad: Bharat Rashtra Samithi (BRS) MLA T Harish Rao said on Thursday, February 6, that over-reliance on cess tax and surcharge collections would lead to revenue losses in Telangana.
The former Telangana finance minister said that the aforementioned taxes which stood at Rs 1.08 lakh crore in 2013-14, have surged to a staggering Rs 5.56 lakh crore by 2025-26. Thus, the percentage of cess and surcharge collections in gross tax revenue has increased from 6.53 per cent in 2013-14 to 10.97 percent by 2025-26.
This sharp rise has sparked concerns among states, which rely on shared tax revenues to fund critical development projects and public services.
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In a post on X, the Siddipet MLA stressed that the growing reliance on cess and surcharge, which remain outside the divisible tax pool, undermines the principles of fiscal federalism and leaves the states financially strained.
“This trend has led to substantial revenue losses for the states, widening the imbalance between the Centre and the states,” Rao added. He suggested the Centre reevaluate the revenue-sharing mechanism to ensure equitable distribution of resources.
