Vala cuts taxes across sectors

Finance minister Vajubhai Vala on Thursday presented the annual Budget 2004-05 in the Gujarat Assembly, showing a Rs 327.25 crore deficit.

Vala is proposing the state Budget for the tenth time.

Vala said the estimated expenditure for the current year is pegged at Rs 30,958.28 crore, of which revenue expenditure is estimated to be Rs 23,786.33 crore and capital expenditure will be Rs 7,171.95 crore.

In a move that is aimed at appeasing the farming community which has had a bitter relationship with the government, Vala announced tax relief for farmers by waiving five per cent duty on power consumed for drawing water by pumps for irrigation. Over 6.50 lakh farmers will be benefited by the waiver.

The government, has, however, proposed a hike in electricity duty on captive power generation for 51 units from the existing rate of 20 paise per unit to 40 paise per unit.

Addressing a long-standing demand for reduction in stamp duty, the minister announced a slash in the stamp duty from 11.20 per cent to 8.40 per cent. In an additional sop for women, Vala said there will be a complete waiver of registration fee on registration of documents of property in favour of women.

The minister announced a relief on sales tax on a whole range of products. As announced earlier, Vala said reduction of sales tax on natural gas from 20 per cent to 12 per cent will take effect from July 11. Appeasing the dyes and chemicals manufacturers, the minister cut the sales tax on chemicals and dyes from six per cent to four per cent.

Aimed at encouraging foreign airlines to introduce direct flights to Gujarat, the government has granted complete exemption of tax on sales of aviation turbine fuel and lubricants.

The required notification in this regard will be issued shortly. Stating that there is no clarity as to whether sales tax is leviable in respect to resale of a used car, Vala said it has been proposed to fix sales tax at the rate of Rs 1,000 on every second-hand car sold.

By introducing this tax, the government will earn revenue and the second-hand car market will become more organised in the state, the minister said.

Cooked food served by hotels and restaurants are at present liable to pay 12 per cent sales tax, but cooked food sold at the price of up to Rs 75 per person is tax-free. The government withdrew the benefit of price limit and hotels and restaurants can now opt for a lump sum amount of tax at four per cent on total turnover of all eatable goods sold.

The government made it clear that despite a change of guard at the Centre, ambitious projects like the Sardar Sarovar project and the Sujallam-Sufallam project, a Rs 6,088 crore irrigation and water conservation project, will continue as per schedule.

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The list

• Overall Budget deficit for 2004-05 estimated at Rs 327.35 crore
• GDP estimated at 1,6,064 crore, indicating a 20 per cent increase over the previous year.
• State annual plan size (proposed expenses) pegged at Rs 8,300 crore.
• Gujarat National Law University to begin from next year (2005-06).
• Provision of Rs 131 crore for modernisation of police force.
• Sales tax on dyes and chemicals down to four per cent from six per cent.
• Sales tax on tiles and sanitaryware down to eight per cent from 15 per cent.
• Aviation turbine fuel and lubricants exempted from sales tax.
• Electricity duty on captive power generation raised to 40 paise a unit.
• Waiver of five per cent duty on power used for taking water by pumps for irrigation.
• Sale of used cars to attract sales tax of Rs 1,000 per car.

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Heard in the House

"You spent the whole year organising festivals and cultural programmes. How much public money did the government spend on this exercise? And did it help the state in any way?"

Chandrikaben Chudasama, Congress MLA from Mangrol.

"Murder, dacoity and rape cases are on the rise in Ahmedabad. What is worse is that many criminals are being shielded by the police. The home minister ought to explain why criminals are running free in Ahmedabad."

Kalupur MLA Mohammed Farooq Shaikh.

"Foreign investment into Gujarat is not the appropriate indicator of how well Gujarat has been attracting investors. Foreign investment is mainly in the IT and telecom sectors, while our strength is the manufacturing sector."

Anil Patel, minister of state for industries.

"After all that mega shows and summits, all that the government has been able to attract is Rs 11 crore worth of investment. What happened to the promised Rs 66,000 crore worth of investments?

Amarsinh Chaudhary, former chief minister.

"Liquor is bound to flow into Gujarat from Daman. But the point here is that is the flow far lesser than what it used to be when you were in power. However, we will still enhance patrolling on approach routes from Daman."

Amit Shah, state home minister in reply to a point raised by Pardi MLA Laxman Patel that bootlegging was rampant along the Gujarat-Daman boundary.