State FM presents surplus budget with tax burden of Rs 730cr.
Gujarat government today increased Value Added Tax (VAT) rate on tobacco and its products in order to prevent and reduce consumption of tobacco and its products. The state budget 2010-11, which was termed as Gujarat's Golden Jubilee year budget, has come up with 15 per cent tax on resale of vehicles.
The finance minister Gujarat, Vajubhai Vala, who presented the budget in the state assembly today, raised Vat on tobacco and its products such as bidi, cigarette and gutkha to 20 per cent inclusive of additional tax from earlier 15 per cent tax slab. However, 'un-manufactured' (raw) tobacco will continue to remain exempted. The government expects to rake in Rs 100 crore from increased Vat on tobacco products.
With second hand vehicle market hotting up, the state wants to tax resale of old vehicles. Considering the increasing sales and purchases of old vehicles, the budget proposes to levy a tax at the rate of 15 per cent of original tax paid on resale of vehicles. Currently, lump-sum tax is payable on purchase and sale of old vehicles. Tractors for agriculture purposes, autorickshaws and invalid carriage for the handicapped persons will however be exempted from this tax.
The state government today reduced tax credit by 2 per cent on purchase of goods produced within the state and used for interstate sales. "The government aims to make up for the losses incurred due to reduction in Central Sales Tax (CST) from 4 per cent to 2 per cent by Central government, which is yet to pay compensation of Rs 2200 crore to the state," said Vajubhai Vala, finance minister, government of Gujarat, in a press conference after presenting the budget.
A registered dealer is entitled to tax credit of the tax paid on local purchases when he sells goods outside the state. "For example, if a trader is eligible to avail 15 per cent tax credit to offset tax paid by him on purchases of local goods, he will now be given credit upto 13 per cent on purchase of local goods," explained Vala. The government will reconsider its decision with regard to tax credit reduction provided Centre compensates the losses caused to the state. The reduction will come into effect from 1 July, 2010.
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The finance minister today changed the structure of the motor vehicle tax. The state budget has proposed to levy lump-sum tax at the rate of 6 per cent on goods vehicles of 3 tonne to 7.5 tonne carrying capacity on compulsory basis. Old vehicles will be given rebate depending upon age of the vehicle. In case of maxicabs, such as passenger vehicle with a capacity of 6 to 12 seats, will now be levied tax on annual basis instead of monthly basis. The government expects to rake in revenues to the tune of Rs 730 crore from the tax announcements made in the budget for the fiscal 2009-10.
The overall size of the budget has increased by 19.60 per cent at Rs 69435 crore and the government estimates to end the fiscal with a surplus of Rs 171.56 crore. "This year's budget is social services, agriculture and women development oriented," added finance minister.
The outlay for annual development plan has been increased by 25.53 per cent or Rs 6,000 crore to Rs 29,500 crore for the fiscal 2010-11 with highest allocation of Rs 12,890 crore for social services. Reacting to the budget, Shaktisinh Gohil, leader of opposition in the state assembly, termed the budget as disappointing saying the budget offers no relief and 15 percent tax on second hand vehicles is an unjust provision.
| BUDGET HIGHLIGHTS |
| # Provision of Rs 1,700 crore made under Agriculture and Co-operation Department. |
| # Provision of Rs 1,895 crore made under Water Resources and Kalpsar Department. |
| # Rs 3,625 crore for Sardar Sarovar Narmada Project. |
| # Provision of Rs 4,200 crore made for Swarnim Gujarat Saurashtra Kutch Water Grid Scheme (SGSKWGS). |
| # Provision of Rs 896.22 crore for Women and Child Development Department. |
| # To establish 3,300 'Nand Ghar' as Anganvadis during the year. |
| # Rs 3,015 crore proposed under Urban Development and Urban Housing Department |
| # Rs 525 crore outlay under the Ports and Transport Department |
| # Gujarat Maritime Board (GMB) to undertake new projects including Marine Ship Building park in form of cluster at Dahej and Bhavnagar for Rs 3,400 crore, extension of Hajira port at an investment of Rs 1,500 crore, new terminal at Dahej at an investment of Rs 2,000 crore, and a comprehensive master plan for all ports at an investment of Rs 120 crore. |
| # Provision of Rs 1,735 crore at an increase of 87 per cent under Energy and Petrochemicals Department. |
| # Two new gas based power stations of 1,000 MW each shall be established at electricity production for additional 2,000 MW. |
| # The government is committed to develop this entire chain as Ram-Hanuman Paavan Path on the lines of Ramatrail in Sri Lanka. A provision of Rs 10 crore has been proposed for this purpose. |
| # Outlay of Rs 100 crore under the Climate Change Department |
| # Proposal to create a Climate Change Trust Fund for research, development and commercialisation of green technology, which will be the first of its kind in the entire country. A provision of Rs 10 crore. |
| # 10 engineering colleges and 9 polytechnic colleges will be started under PPP model |
| # Plan to provide gas through pipelines to two lakh households through gas grid |
| # Around 5550 circuit kms of transmission lines will be added during the year involving expenditure of Rs 3000 crore |
| # Mahatma Mandir will be constructed at Gandhinagar at cost of Rs 100 crore to commemorate Golden Jubilee Year |
| # Keeping in view this year’s “Swarnim Gujarat” celebration a noteworthy provision has been made for development of “Ram Hanuman Pavan Path”, “Budhist Circuit”, “Mission Mangalam” and “Sant Nagri” in the tourism sector. |
| # Plan to open 700 temporary and permanent new courts. |
| # Provision of Rs 44.51 crore to create Quick Response Team and Bomb |
| # Detection and Disposal Squad in coastal as well as border districts |