Chief minister B S Yeddyurappa on Thursday presented a surplus budget for fiscal 2011-12 while marginally increasing the rate of value added tax (VAT) on all goods. The new proposals are aimed at raising additional revenues of Rs 1,020 crore.
Presenting an ambitious budget in two parts, with a separate budget for agriculture sector, in the state legislative assembly here, Yeddyurappa projected a revenue surplus of Rs 1,278.94 crore for the next fiscal, which is a drop of 19.8 per cent over the revised estimate of Rs 1,595.35 crore for the current fiscal (2010-11). The separate agri budget is being presented for the first time.
Yeddyurappa, who also holds the finance portfolio, has projected the fiscal deficit at Rs 12,482 crore or 2.87 per cent of the gross state domestic product (GSDP). As per the revised estimates, the fiscal deficit would be 3.07 per cent of the GSDP.
In order to meet the increasing development expenditure in the new fiscal, the chief minister has raised VAT on jewellery and articles of gold and other precious and semi-precious metals to 2 per cent from 1 per cent.
VAT rates on goods currently taxable at 13.5 have been increased to 14 per cent.
“I propose to double the betting tax on horse racing to 8 per cent from 4 per cent and excise duty to 20 per cent from 10 per cent across the 17 slabs,” the chief minister said in his closing remarks to the three-hour long budget presentation in Kannada.
VAT exemption on paddy, rice, wheat, pulses and other agriculture products, will continue during the new fiscal. Coconut and de-oiled rice bran will also be exempted from VAT. Tax on school bags has been reduced to 5 per cent for bags priced up to Rs 500. Tax rate on kitchen utensils has been reduced from 13.5 per cent to 5 per cent.
As part of the resource mobilisation efforts, the chief minister also sought to levy a fixed stamp duty of Rs 1,000 on trusts set up for the public, religious and charitable purposes.
“Stamp duty on trusts other than public, religious and charitable trusts will be levied at 6 per cent on transfer or disposition of property. I propose to raise Rs 300 crore from the proposals on stamps and registration,” Yeddyurappa said.
To allocate Rs 20 crore every year for urban transport fund, the budget proposes to raise the cess by 1 per cent to 11 per cent with no changes in the motor vehicle tax.
Total receipts for this fiscal (2011-12) are expected to be Rs 83,729 crore, including Rs 66,313 crore from revenue and Rs 17,416 crore from capital, while total expenditure is estimated to be Rs 85,319 crore comprising Rs 65,034 crore as revenue outgo and Rs 20,285 crore as capital outgo.
The total plan size for next fiscal has been increased by 23 per cent to Rs 38,070 crore compared to Rs 31,050 crore during the present year (2010-11). It is the largest plan in per capita terms among all states, the chief minister said in his budget speech.
“In the last one year the economy has rebounded well to a high growth path of close to 9 per cent per annum. The downside risks to growth have certainly receded. The private consumption expenditure and gross capital formation are also showing a strong acceleration, which is reflected in high growth of tax collections,” Yeddyurappa said.
The state has collected Rs 38,049 crore from various taxes as against the estimated Rs 36,228 crore, registering a 24.4 per cent increase over the previous fiscal (2009-10), he said.
With additional resource mobilisation of Rs 1,020 crore, the total tax collection in the new fiscal is estimated to be Rs 43,817 crore. The state is expected to collect Rs 3,675 crore from non-tax revenue. During 2011-12, Rs 8,402 crore is expected by devolution and Rs 10,419 crore by way of grants from government of India. Including Rs 15,354 crore from open market borrowing, the total capital receipts are expected to be Rs 17,416 crore.
