The Maharashtra budget for 2009-10 announced today many incentives for the ‘aam aadmi’ — a move clearly aimed at the state elections that are due in October — but also proposed wide-ranging taxation measures on the so-called luxury and high-end products that is projected to net an additional Rs 910 crore.
The budget, presented by State Finance Minister Dilip Walse-Patil, projected a budgetary deficit of Rs 113.66 crore – the first deficit budget in three years.
Electronic goods, cigarettes, liquor and high-end cars bore the brunt of the fresh taxation measures. In a significant move, Patil removed the ceiling of Rs 25 crore on the stamp duty on corporate mergers and acquisition deals.
The value-added tax (VAT) on mobile phones, cordless phones, video phones, video and digital cameras has been increased from 4 per cent to 12.5 per cent. Though the minister did not propose any changes in the 7 per cent motor vehicle tax (MVT) on four-wheelers up to Rs 10 lakh, he increased it for vehicles up to Rs 20 lakh to 8 per cent and those above Rs 20 lakh to 9 per cent.
According to the provisions of the MVT Act, tax on vehicles owned by companies or imported in India will be collected at double the rate of the vehicles owned by individuals, or manufactured in India.
Similarly, the stamp duty on contract for advertisement, rights of telecasting films, copy rights etc. has been doubled. At present, the stamp duty is levied at the rate of Rs. 2.50 per Rs 100 value of the contracts.
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Predictably, liquor attracted the minister’s special attention. While the sales tax on all kinds of liquors including Indian Made Foreign Liquor (IMFL), country liquor and imported liquor has been increased from 20 per cent to 25 per cent, the excise duty on IMFL has been increased Rs 160 per litre to Rs 180.
The sales tax on tobacco products, excluding bidi and unmanufactured tobacco, has been increased from 12 per cent to 20 per cent.
The finance minister, however, reduced the tax on the space industry, energy saving equipment, medical equipment etc. Items like pressure vessels, reactors and chemical steerage used in satellite and rocket building will now attract VAT at the rate of 4 per cent instead of 12.5 per cent earlier.
Solar energy equipment like solar panels, solar cookers, solar heaters etc have been exempted from VAT and the duty on compact fluorescent lamps has been reduced from 12.5 per cent to four per cent.
In a special incentive to the hospitality sector, hotels and restaurants up to three-star ratings will now attract VAT at the rate of 5 per cent instead of the earlier 8 per cent.
The minister has also proposed to reduce the VAT on medical equipment like scalp veins, stethoscopes, dialysis instruments etc from 12.5 per cent to 4 per cent.
Imitation jewellery will also now attract VAT at the rate of just 1 per cent instead of earlier 4 per cent.
One of the major highlights of the budget was a special provision of Rs 11,915 crore for infrastructure projects like roads, bridges, railway, airports, ports and irrigation projects to celebrate the state’s golden jubilee year.
| BUDGET HIGHLIGHTS |
| State's first deficit budget in the three financial years |
| Estimated budgetary deficit to be Rs 113.66 crore |
| VAT on mobile phones, cordless phones, video phones, video and digital cameras has been increased from 4 per cent to 12.5 per cent |
| High-end cars to attract more motor vehicle tax (MVT). Vehicles up to Rs 20 lakh to 8 per cent and above Rs 20 lakh to 9 per cent |
| Stamp duty on contract for advertisement, rights of telecasting films and copy rights to be increased from Rs 2.50 to Rs 5 per Rs 100. |
| Ceiling of Rs 25 crore on the stamp duty levied on M&As of companies is removed |
| Increase in both sales tax and excise duty on liquor |
| The sales tax on tobacco products increased from 12 per cent to 20 per cent |
| VAT on selected items used in space and satellite industry reduced from 12.5 per cent to 4 per cent |
| Solar energy equipment exempted from VAT and CFLs to attract VAT at 4 per cent |
| Hotels and restaurants up to 3 star ratings will now attract VAT at the rate of 5 per cent instead of earlier 8 per cent |
| VAT on medical equipment like scalp veins, stethoscopes and dialysis instruments from 12.5 per cent to 4 per cent |
| The imitation jewellery will also now attract the VAT at the rate of just 1 per cent instead of earlier 4 per cent |
| Special provision of Rs 11,915 crore for infrastructure projects like roads, bridges, railway, airports, ports and irrigation projects to celebrate golden jubilee year of state's formation |
While presenting the interim budget earlier, the minister had proposed a plan outlay of Rs 26,000 crore. That has been increased by Rs 11,915 crore to give a push to the infrastructure sector.
The government has also proposed a provision of Rs 7578 crore to completely remove the backlog in the irrigation sector in the state. “Now, there is no financial backlog in the irrigation sector in the state,” the minister said.