The people of Gujarat has reason to cheer as the state government has proposed tax reduction and exemption on number of items including a long awaited cut in electricity duty in its budget for the fiscal 2012-13. Much to the relief of consumers and industry this year when Gujarat is slated to go for assembly elections, the finance minister of the state Vajubhai Vala, who presented the budget on Friday in the state assembly, avoided imposing new taxes and hike in any other levies.
As per the government estimates, the tax sops offered are to the tune of Rs 410 crore, which includes Rs 200 crore each for slashing of electricity duty and value added tax (VAT) rates.
The state government on Friday proposed to bring down electricity duty in case of residential and education institute categories by 25 per cent. With this, the electricity duty for residential would stand at 15 per cent from 20 per cent earlier and 7.75 per cent for educational institutions and hostels from from 10 per cent.
As a result, consumers in residential category would be able to save about 24 paise per unit from the electricity duty charged at around 96 paise per unit at present. Nearly 10 million electricity consumers including residential, rural and educational establishments of the state will get a benefit of lower duty.
It may be noted here that last time, during the election year in 2007, the finance minister had trimmed electricity duty for residences and academic institutions.
The state finance minister has also reduced taxes on several other products, thereby benefitting retail consumers. The rate of tax on battery-operated two-wheelers is proposed to be slashed from 15 per cent to 5 per cent including additional tax. Electric two-wheeler makers had been demanding a tax cut for a long.
As a relief to the housing sector, the minister pruned the current tax on hardware items used as fittings for doors, windows and furniture from 15 per cent to 5 per cent.
Additionally, the minister also eased tax burden on some of the dairy products including yogurt, butter, cheese and paneer, from the current 15 per cent to 5 per cent including additional tax. The minister, in his budget speech, allocated Rs 343.75 crore for animal husbandry and dairy activities.
Vala also hiked the limit for stamp duty exemption on the instruments executed by the self help groups (SHGs)/sakhi mandals (SMs) for securing loan/borrowings upto Rs two lakh. This would translate into the benefit of about Rs 10 crore to about 200,000 SHGs and SMs in Gujarat, the minister informed.
With a view to providing financial relief to the patients in the state, medical implants for heart disease and blood bag have completely been exempted from the current 5 per cent including additional tax.
Goods like toys, incense stick and some other devotional items, thread used for kite flying, some of the cosmetic items, glass bead among other have been brought under exemption.
After making the provisions for the proposed tax relief, the state budget for the year 2012-13 shows an estimated overall surplus of Rs 317.22 crore.
Commenting on the budget, chief minister, Narendra Modi termed it as 'ambitious and farsighted for inclusive growth of the state.'
"Over the last ten years Gujarat has attained greater prosperity and equitable development through fiscal discipline and management, coupled with optimum utilization of monetary, natural and human resources," he said.
"This budget has several welfare projects for every family. There is something for everyone, be it poor, backward, have-nots, youth, labour, young or old, children or women, trader or entrepreneur, providing everybody an opportunity to take part in the state's development," added Modi.
