Maharashtra offers tax relief for home loans

BUDGET 2005

Stamp duty for housing loans up to Rs 10 lakh will be cut by 50%.

Presenting a revenue surplus Budget without announcing any new taxes, Maharashtra's Finance Minister Jayant Patil announced a tax holiday on stamp duty for housing loans up to Rs 1 lakh. Similarly, the stamp duty for housing loans up to Rs 10 lakh will be reduced by 50 per cent.

"We expect the realisation of revenue from stamp duty and registration to touch Rs 4,000 crore, an increase of about 20 per cent against 2003-04. We are committed to reducing and rationalising stamp duty for other segments as well with a view to making it more affordable to the people and encourage compliance," Patil said.

The stamp duty for commodity transactions has been reduced by 90 per cent and that for gilts trades by 95 per cent. Patil also slashed the stamp duty on government debt by 95 per cent.

However, this will not bring any major impact as most state development loans are in dematerialised form and so do not attract stamp duty.

Bonds floated by state government undertakings guaranteed by the Maharashtra government are not traded as most debt paper is in the junk category. The government is in the process of buying the bonds back from banks.

The last time a revenue surplus Budget was presented in Maharashtra was in 1993-1994. Patil also further committed the state government to not raising any fresh money through open market borrowings.

Explaining this, Patil said: "Last year the revenue collections were Rs 40,000 crore, 20.62 per cent higher than the collections in 2003-2004. We have accounted for a still modest 17.60 per cent increase in revenue collections at Rs 50, 429.82 crore. The state fiscal deficit is down to Rs 8,853 crore."

He added that out of a plan outlay of Rs 11,000 crore (cleared by the planning commission), a plan outlay of Rs 8,416.64 crore had been budgeted for, while the remaining Rs 2,583.36 crore would be budgeted during the year. Patil also announced the introduction of the value added tax (VAT) from April 1, 2005 in Maharashtra.

Patil also said that the state government would review its commitment to granting free power to farmers and would see whether only marginal and poor farmers could be made eligible for the scheme.

A review of the scheme had suggested that power consumption in the state by farmers had shot up. The government had already paid Rs 750 crore to the state electricity board by way of quarterly dues for power bills he said.

Patil also said that the current session of the state legislature would witness the presentation of a fiscal responsibility Bill that, among other things, would lead to the introduction of monthly cash flow statements by the state government.

Under the VAT system, the threshold limit for registration for resellers and manufacturers will be a turnover of Rs 5 lakh. For importers, the limit will be Rs 1 lakh, Patil said. He added the rate of tax for various commodities will be as per the national consensus.

"Additional excise duty in lieu of sales tax is leviable on sugar, tobacco and textiles by the Union government. Accordingly, these remain outside the purview of VAT. Foodgrains and pulses will also remain outside VAT's purview. The 4 per cent rate of tax will apply to important industrial raw materials and some items of daily consumption. Precious metals, precious and semi precious stones, pearls and jewellers will be taxed at 1 per cent. The tax rate for liquor and motor spirits remains unchanged. All other commodities will be taxed at the standard rate of 12.5 per cent," Patil said.