Vala proposes Rs 363.95cr deficit Budget

VAT regime from April 2002. Rs 800cr for drought relief

Finance minister Vaju Vala on Thursday proposed a budget for the year 2001-2002 with an annual outlay of Rs 7,200 crores and a total deficit of RS 363.95 crores, preparing the groundwork to prime up the state for a value added tax regime.

The value added tax is set to replace the sales tax by April 2002 as agreed by the conference of chief ministers in New- Delhi and the state government has already carried out reforms in -the tax structure to introduce it.

The earthquake cast a long shadow over the budget with a burden of RS 11,000 crores in terms of damages to be borne by the state government. The government has allocated RS 2,025.15 crores for various quake relief works.

The total revenue has been estimated at RS 36,102.75 crores whereas the total revenue receipts have been estimated at RS 20,485.37 crores while the capital receipts are estimated at RS 14,705.38 crores which includes the loans to be received from the World Bank and the Asian Development Bank.

The estimated expenditure is estimated at Rs 36,466.71 crores with a total revenue expenditure estimated at Rs 28,860.12 crores. An amount of Rs 5,288.11 crores has been estimated as non-plan expenditure towards earthquake relief.

The annual budget has made a provision of Rs 130 crores for the power loom subsidy, RS 180 crores for agricultural subsidy as per the award of the Electricity Regulatory Commission and RS 125 crores for crop insurance.

A provision of Rs 2,292.73 crores, as non-plan expenditure, has been made in addition to the World Bank and Asian Development Bank assistance of RS 4,125 crores for quake-related expenses. provision of Rs 131 crores for agriculture, RS 441.73 crores for industrial relief, RS 93 crores for cottage industries, RS 52.27 crores for tourism and RS 200 crores for uncovered sectors has also been provided.

Meanwhile, a provision of RS 800.57 crores has been made for drought to ensure that relief works continue at a brisk pace. Meanwhile, in a significant decision, a provision of RS 20 crores has been made to provide employment to 75,000 educated unemployed and for providing education to the deprived children. RS 80 crores have been allotted for water conservation under the Sardar Patel Participatory Water Harvesting scheme.

Besides a provision of Rs 300 crores imder Indira Awas Yojana for construction of houses in earthquake affected areas, travelling concessions for senior, citizens to pilgrimage places in the state, Mr Vala also announced financial assistance of Rs 20,000 for Kailas Mansarovar pilgrims and a Rs 1 lakh insurance cover for Amarnath pilgrims from the state. Child health also remained high on the agenda with Rs 50 lakhs allocated to reduce infant, mortality while another Rs-.50 lakhs have been allotted for school health check up programme.

Meanwhile, mobile phone users will feel the pinch as the state government has decided to levy a sales tax of four per. cent on sim-cards. Mr. Vala proposed a one per cent cess on diesel to compensate for the octroi abolition in municipalities, 20 per cent increase in luxury- tax on pan masala with tobacco or gutkha in lieu of the sales tax.

He further proposed an increase of sales tax on synthetic yarn from two to four per cent while a set off of two per cent will be available on manufacture of synthetic yarn, and an increase from two per cent to four per cent on sales tax on bulk drugs.

The finance minister proposed a ten-fold composite lifetime tax at the time of registration instead of the annual payment of tax on motor vehicles such as rickshaw, delivery van, pick-up van, etc to reduce the burden of the administration as well as the tax payer.

Existing registration holders will he given a facility of set off through monthly installments to be paid towards the proposed system after taking into consideration the life of the vehicle.

Entry tax on motor vehicles, cement, marble, Kotastone, naphtha, light diesel oil and high-speed diesel oil has been made to offset the advantage of lower local or Central taxes on commodities in other states imported into the state.

Mr. Vala said the entry tax will be equal to the sales tax rates applicable in the state. Mr. Vala has also decided to get stern with perpetual sales tax offenders and businessmen.

Those who fail to pay the sales tax along with their three consecutive returns will have their tax registrations cancelled. Moreover, Mr. Vala has also sought to reduce the rate of interest on delayed sales tax from 24 per cent to 18 per cent and also that on the payment of refund from 14 per cent to nine per cent. Mr. Vala also proposed means of disposal of pending assessment of sales tax cases through summary assessments by payment of some fees.

The luxury tax on pan masala and gutkha has ‘been introduced in lieu of the sales tax due to judgment of the Supreme Court restraining states from levying sales tax as it is liable for additional excise duty from the Centre.

Mr. Vala further proposed to reduce the stamp duty on transfer of movable properties from eight per cent to two per cent. Stamp duty on mortgages without possession or further charge on immovable properties provided as securities to banks and financial institutions has been reduced from three per cent to two per cent within a ceiling of Rs 2 lakhs.

Sales tax has been reduced from 12 per cent to eight per cent on ghee and on naphtha by four per cent to grant relief to industries and power generating units whereas the sales tax rate on tyres has also been reduced from 12 per cent to eight per cent to prevent diversion of trade with a similar reduction of rate on tubes and flaps of motor vehicles and rubber.

Contrarily, a rate of eight per cent has been proposed on bamboo, which was previously exempted from tax. Levy on mosaic tiles has been increased from four per cent to eight per cent, vitaminised instant milk food from four per cent to eight per cent and stoneware from four per cent to eight per cent. A three-fold increase in the floor rates has been proposed on jam, pulp, ketchup and sauce from four to 12 per cent, whereas a 100 per cent increase in the floor rates has been proposed on loose tea.

Republished from The Asian Age