Announcing the state budget for fiscal 2013-14, Gujarat finance minister Nitin Patel on Wednesday offered certain tax relaxation for beneficiaries like farmers, students, urban and rural poor and middle class families, cottage industries and dealers.
The state government not only offered exemption in areas like micro irrigation equipment, educational items and agarbatti dust, it also raised the turnover cap for lump sum VAT payment for dealers. However, as against the popular expectations the state government stayed away from offering any relief in petrol, diesel and CNG prices by not revising VAT on the same.
With proposed relief and increase in taxes of Rs 245 crore and Rs 289 crore, respectively, Patel estimated the overall surplus at Rs 840.45 crore, up from surplus as per budget estimates at Rs 796.45 crore.
In order to make available the benefits of this provision of lump sum tax to more dealers of Gujarat, it has been proposed to increase the total turnover limit of Rs 50 lakhs to Rs 75 lakhs under section 14 of the Gujarat Value Added Tax (VAT) Act 2003.
For the farmers community, the state government has fully exempted micro irrigation system equipment from current rate of tax of 5 per cent including additional tax.
In a bid to to encourage use of carbon credit, the budget proposed inclusion of carbon credit as an intangible or incorporeal goods in entry 41 of Schedule II and thereby make it taxable at 5 per cent including additional tax, instead of the current 15 per cent tax under the residuary entry. "This will result in a loss to the state exchequer of Rs 132 crore," Patel added.
In a populist move, the state government has also proposed to fully exempt professional tax on the salary and wage earners having salaries or wages of less than Rs 6,000 per month.
Patel also proposed to increase the rate of tax on cigarette made from tobacco from current 25 per cent including additional tax to 30 per cent including additional tax, which is expected to bring in an additional Rs 32 crore worth revenue for the state exchequer. What could also hit the second hand (used) two wheelers as well as medium and heavy duty commercial vehicles' market in the state is the proposal of one per cent tax - subject to maximum Rs 500 and Rs 5,000, respectively. So far, the state was levying a one per cent tax only on used motor cars subject to maximum Rs 2000.
The government has proposed to fully exempt educational items including pencils, foot rules, slide rules, mathematical instruments, school colour box, rubber erasers and pencil sharpeners from the current rate of 5 per cent tax including additional tax.
