Despite a revenue deficit of Rs 7,654.50 crore, the Maharashtra government today did not propose a hike in existing taxes or introduce new ones in its annual budget for 2010-11.
Instead the state government, which presented its first budget after the assembly elections in October last year, has offered a slew of exemptions for various sectors.
The government said excess sales tax collections against the target of Rs 31,346 crore for 2009-10, rise in devolution of funds to Rs 91,709 crore for the next five years under the 13th Finance Commission against Rs 36,194 crore and additional revenue mobilization of Rs 700 crore due to the recent decision to increase VAT to 5 per cent from 4 per cent on certain commodities, prompted them to take such a stand.
Of the Rs 91,709 crore, the state would get Rs 75,406 crore from the Union taxes during 2010-11 to 2014-15 and grants in aid of Rs 16,302 crore. However, the government has proposed an annual plan size of Rs 33,934 crore for 2010-11 down from Rs 37,000 crore for 2009-10. The Planning Commission is yet to approve the proposed annual plan.
Following the Centre’s decision to postpone the introduction of goods and services tax (GST) from April 2011, the state government has proposed extension of the tax period for food grains and some other essential items, including raisins, currants and tea.
Even though the empowered committee had recommended a tax rate of 4 per cent on these goods, the government, in a bid to keep the prices of these essential items under control, has proposed tax exemptions upto March 31, 2011 or the launch of the GST Act — whichever is earlier.
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State Finance Minister Sunil Tatkare extended the tax relief deadline for aviation turbine fuel (ATF) to March 31, 2011. Tax on ATF sold at small airports, except Mumbai and Pune, was already reduced to 4 per cent.
The government announced a reduction in tax rates on vehicles operated by battery or on solar energy to 5 per cent from 12.5 per cent and made solar lanterns tax free.
The government proposed a scheme for builders and developers, where they need to pay 1 per cent VAT on the contract price of flats mentioned in the agreement of sale, starting April 1 this year.
The government has proposed a relief in luxury tax to small hotels and lodges by enhancing the limit for liability of tax. The finance minister said rents upto Rs 750 per day per accommodation is being exempted. Currently, hotels charging rent up to Rs 200 per day are not liable to pay luxury tax. For rents between Rs 200 to Rs 1,200, luxury tax is deducted at 4 per cent and above Rs 1,200, the rate is 10 per cent
| HIGHLIGHTS # Tax exemption on rice, pulses, wheat, flours extended up to March 31, 2011 # Concessional VAT rate for raisins, currants and tea to continue # Tax concessio to hairpins, blood transfusion apparatus, vehicles operated on battery or solar energy # Solar lanterns, camphor, vermi compose bed, cotton seed oil cake tax free # Relief in luxury tax to small hotels and lodges, no tax on rent upto Rs 750 # Composition scheme for builders and developers 1% VAT # Increase in turnover limit for VAT audit to Rs 60 lakh from Rs 40 lakh |
The finance minister has also proposed measures for expediting refunds to the dealers. It would now be mandatory to record the TIN of the purchaser on the tax invoice. This is expected to facilitate evaluations and would help in disbursing the refunds faster.
However, the minister has proposed stringent provisions in the form of a penalty for non issuance of bills to customers in order to protect their interest. Tatkare has also increased the time limit to 30 days from 21 days for payment of tax by small dealers.
The turnover limit for audit under Section 61 of VAT Act is raised to Rs 60 lakh from Rs 40 lakh. It will be mandatory for dealers covered by the package scheme of incentives to file audit report. The government has also proposed amendments to the VAT Act that include allowing transaction-wise assessment and provision for part of part refunds.