Andhra Pradesh government had decided to avoid VAT leaks to Telangana. As a government, Andhra Pradesh procures several material including electronics, furniture and stationery etc. for its official use. These materials are supplied by companies in Hyderabad and are being billed in the city.
So the VAT on these bills are going to Telangana government. However AP government is putting a condition that going further these materials have to be billed in Hyderabad so that the VAT comes to Andhra Pradesh government. The companies who do not have their establishments in AP are also looking to set shop in the state as they do not want to let go big orders of the state.
For an instance, HP supplies most Infrastructure to AP government is setting shop in AP in the next few months to bill the orders in AP. HP previously billed huge contingent of Tabs, Laptops and other orders of AP government in Hyderabad losing huge amount of VAT to Telangana.
