 |
|
||
|
|||
|
|
|
||
|
|||
|
I now go to the tax proposals. 161. Sir, I am happy to announce our collection of revenue from all tax sources has been extremely buoyant. All the revenue earning Departments have collected revenues well over their respective targets and our estimates. The officers and staff of these Departments need to be complimented for their efforts and their hard work that has brought about these results. To elaborate, the growth rate achieved in the collection of Commercial Taxes of about 27% is perhaps the highest in the country. This is a remarkable achievement. Similarly, Excise revenue and the revenues from the Stamps and Registration and Transport have registered impressive growths. I congratulate all these Departments for their good performance. I am confident in the year 2005-06 too they will perform similarly and enable our resource mobilization estimates to be more than fully realized.
COMMERCIAL TAXES VALUE ADDED TAX: 162. Sir, the State is all set to introduce Value Added Tax (VAT) in the place of sales tax, on all commodities except petrol, diesel, Aviation Turbine Fuel and sugar cane, from April, 2005. Introduction of Value Added Tax has been a collective endeavour of all the States and Union Territories, with the Central Government supporting this historic tax reform in the country. Our likely revenue loss in the first year of introduction of Value Added Tax is about Rs.2160 crores. The Central Government will compensate the revenue loss fully in the first year, 75% loss in the second year and 50% in the third year. 163. Sir, as I have clarified on several occasions, the overall tax effect on the common consumers under Value Added Tax would be lower than the present tax effect. Lower tax on many goods of common consumption, removal of tax cascading by the input tax credit scheme and adoption of a low standard rate of 12.5% should result in the reduction of prices of many commodities. I expect the trade and industry to respond positively. 164. I propose to re-organize the Commercial Taxes Department on a functional basis as required for the effective implementation of Value Added Tax. I have full confidence in the preparedness and the capability of the department for the successful implementation of Value Added Tax in the State. Reliefs: 165. Trade and industry have made representations for several reliefs and concessions. The design of Value Added Tax is on the basis of national consensus. Within such consensus it has been possible for me to consider positively a few requests not only in the interest of our trade and industry but also the general public. 166. Accordingly, I propose to exempt under the proposed Value Added Tax, (i) paddy and rice for one year, (ii) wheat for one year, (iii) pulses for one year, (iv) seeds, (v) awalakki, (vi) mandakki, (vii) pappad and (viii) branded bread and bun. 167. I also propose to reduce tax on Tea to 4%. 168. The merger of sales tax with excise duty on rectified spirit and liquor has ensured effective collection of revenue. Considering this, I propose to bring even molasses under a similar scheme and exempt molasses from tax under Value Added Tax and levy an equivalent Excise duty on rectified spirit manufactured out of molasses. Rationalisation measures: 169. I propose to bring in certain rationalization measures in the Value Added Tax Act. The details of these measures are at Annexure II. 170. Industrial units that are presently enjoying some tax incentives have represented that these incentives should be continued even under Value Added Tax. In line with the national consensus, I propose to continue them under Value Added Tax, with suitable modifications in the tax exemption scheme ensuring that the value chain is not broken and there is no additional revenue loss. SALES TAX: Reliefs: 171. Karasamadhana Scheme: Several tax amnesty schemes have been announced in the past to reduce arrears of sales tax but with limited success. Considering that Value Added Tax is being introduced from April, 2005 and the need to reduce the arrears of sales tax as we go into the new system, as a last chance to those would like to clear their arrears, I propose to announce the following scheme: 172. If a dealer pays the tax admitted or assessed in full for any year upto 31st March, 2004, on or before 30th May, 2005 alongwith 10% of the penalties and interest levied or leviable and also withdraws any appeal filed disputing the tax assessed or penalties levied, the balance 90% of the interest and penalties levied or leviable would be waived. 173. If a dealer pays 10% of the penalties and interest levied or leviable for any year upto 31st March, 2004, on or before 30th May, 2005 and also withdraws any appeal filed disputing the penalties levied, the balance 90% of the interest and penalties levied or leviable. 174. I propose to, (1) exempt tax on leasing of feature films retrospectively from August, 2004. (2) continue sales tax exemption on diesel sold to fishermen and increase the quantity of diesel eligible for sales tax exemption from 50,000 kilo litres to 55,000 kilo litres for the year 2005-06. Rationalisation measures: 175. I propose to bring in certain rationalization measures as in Annexure II. CENTRAL SALES TAX: Rationalisation measures: 176. I propose to reduce tax on inter-State sale of two wheelers, three wheelers and plastic stitching yarn to 1% to encourage sales from our State. SPECIAL ENTRY TAX: Rationalisation measures: 177. I propose to amend the relevant provisions of the Special Entry Tax Act which refer to the current sales tax suitably considering introduction of Value Added Tax from April, 2005. 178. I also propose to amend the definition relating to importer to specifically exempt Central and State Government Departments from payment of tax.
179.
I propose to levy Special Entry Tax
plastic woven sacks, paper and stationery to prevent trade diversion. Reliefs: 180. I propose to exempt notified goods brought into the State, (i) for exhibition, display, demonstration, performance, concert, shows or similar events. (ii) by research and development institutions and educational institutions, free of cost from outside the country. (iii) by persons on transfer or change of residence. ENTRY TAX: Rationalisation measures: 181. I propose to bring in certain rationalization measures in the Entry Tax Act. The details of these measures are at Annexure III. BETTING TAX: Relief: 182. In my last Budget presented in July, 2004, I had proposed to fix the composition amounts payable in respect of horse racing at the rate of 4% of the stake money for the year 2004-05. The licensees have represented that such revision be given effect prospectively. Considering their request I propose to give effect to the revision in composition amounts from August, 2004. PROFESSIONS TAX: Rationalisation measure: 183. I propose to provide for levy of interest for delayed enrolment by self-employed persons liable to pay tax. Relief: 184. Considering the representation made by the legal practitioners for tax relief to those newly entering the profession, I propose to increase their exemption limit to 10 years and revise the tax slabs as in Annexure IV. LOTTERY TAX: Rationalisation measure: 185. I propose to bring in suitable amendment retrospectively to provide for levy of tax on promoters of lotteries of other States who are disputing the levy as not being authorized promoters. ENTERTAINMENTS TAX: Reliefs: 186. The film industry has represented for reduction in composition tax and show tax. Considering their request, I propose to reduce composition tax and show tax as in Annexure V. 187. In order to encourage the circus companies which are in difficulty, I propose to exempt them from Entertainments Tax. Rationalisation measures: 188. I propose to, (1) remove the present discretion in levy of penalty for filing of incorrect return and provide for levy of fixed penalties. (2) provide for suitable rules to permit payment of tax due in instalments in cases of financial hardship. 189. Consequential Amendments: The relevant tax laws need amendments to implement the above proposed measures. These amendments together with other amendments for rationalization will be moved. EXCISE
190.
During 2004-05 budget,
I had proposed to bring in major reforms and radical changes in arrack
trade; 191. In this budget, I am not proposing any major changes in Excise policy or levy of additional taxes except bringing in some simplification and rationalisation of the existing tax structure. 192. To make it more realistic and as per market forces, I propose the maximum selling price of arrack not to exceed Rs.115/- per Bulk Litre as against the existing Rs.95/- per Bulk Litre. 193. To create a level playing field between captive and non-captive distilleries, a uniform fee of Rs.6-00 per Bulk Litre will be levied on Rectified Spirit instead of the presently levied Rs.4/- and Rs.6-50 per Bulk Litre respectively. 194. As additional revenue mobilization, I propose to allow the export of draught beer out side Karnataka. 195. Excise Revenue arrears have become a matter of concern. Therefore, I intend to give one more opportunity by extending the Kara Samadhana Scheme, so as to include arrears and loss sustained, which remained in default during the neera agitation in the State. 196. During 2005-06, we are confident of getting more than Rs.3000 Crores Excise revenue, without any additional tax burden on the tax payer. I propose to further tighten the enforcement measures by making penal provisions more stringent. Accordingly, I propose to enhance the punishment and to make excise offences non-bailable. Proposals to amend the Karnataka Excise Act will be moved. Similarly, the Excise Department will be restructured with an emphasis on enforcement to increase the efficiency and effectiveness of administration. STAMPS AND REGISTRATION 197. I do not propose any increase in Stamp Duties or Registration charges this year also. However I propose to revise the existing estimated guideline values of immovable properties situated in Bangalore Urban District and Other District Head quarters, in view of the upward trend in real estate market.
198.
I propose to extend full exemption
of Stamp duty and Registration fee, on all loan and credit documents
executed by farmers for availing Agricultural Finance. MOTOR VEHICLES TAX 199. Computerization of all Regional Transport Offices in the State will be taken up during the financial year. Smart card based driving licences, registration certificates and high security registration number plates will also be introduced. These programmes will be taken up with private participation and the funds required will be generated by levying user charges. 200. In order to encourage tourism, I propose to introduce separate clause of tax for air-conditioned integral/ monocoque buses, covered by All India Tourist Permits. I propose to enhance the tax on multi-axle, articulated goods vehicles and lifetime tax on two wheelers costing more than Rs. 50,000/-. Changes proposed are detailed at Annexure - 7. 201. These measures will yield an additional revenue of Rs.9 crores. Revised Estimates 2004-05 202. The Revised Estimates of total receipts are Rs. 33332.84 Crore as compared to the Budget Estimates of Rs. 32065.99 Crore for 2004-05. The total expenditure is expected to be Rs. 33273.08 Crore according to the Revised Estimates against the Budget Estimates of Rs. 31591.88 Crore for 2004-05. After taking into account the surplus in the Public Account, the closing balance for the year is likely to be Rs. 72.66 Crore as against the expected closing balance of Rs. 73.32 Crore at the time of presentation of the 2004-05 Budget. Budget Estimates 2005-06 203. The total receipts are expected to be Rs. 34592.06 Crore comprising revenue receipts of Rs. 29218.47 Crore and capital receipts of Rs. 5373.59 Crore. The total expenditure is likely to be Rs. 34615.15 Crore of which revenue expenditure is estimated at Rs. 28364.01 Crore and capital expenditure is estimated at Rs. 6251.14 Crore. 204. Government expects to raise Rs. 18680.16 Crore in tax revenue and Rs. 4090.30 Crore in non-tax revenue. In addition, Government expects to raise Rs. 1269.00 Crore from Market Borrowings (net), Rs. 2191.12 Crore as total loans from the Central Government and Rs. 1015.00 Crore from RBI and other Financial Institutions. 205. Identifying fiscal discipline as a critical factor for sustainable development, in the year 2002 the Legislature of Karnataka had enacted the Karnataka Fiscal Responsibility Act that puts a responsibility on the Government to eliminate the Consolidated Revenue Deficit by the year 2005-06 and restrict the Consolidated Fiscal Deficit to 3% of GSDP. The year ahead of us is a very important year in that respect since this year is the target year under the Fiscal Responsibility Act. This budget meets the target set by the Karnataka Legislature in the Act. The Revenue Surplus for 2005-06 is estimated to be Rs. 854.46 crore, which is 0.52% of GSDP and Fiscal Deficit is estimated to be Rs. 4714.46 crore, which is 2.86% of GSDP. With the interest payment on off budget borrowing estimated to be at Rs.791.02 crore, the Consolidated Revenue Surplus is budgeted to be Rs. 63.44 Crore. 206. Taking into account the opening balance of Rs. 72.66 Crore, the closing balance is estimated at Rs. 49.57 Crore. FIRM STEPS 207. What we dreamt in the last budget has become a reality. Fiscal stability is most apparent in our budget. Resources have flown in as we expected. Our social concerns have been the driver for our policies. Growth has been achieved on the foundation of equity. We have taken firm steps to meet our promises. Our aim is a Vibrant Karnataka where everybody is equal. The golden rays are visible on the horizon. In the words of Rashtrakavi Kuvempu: annadanadinoludisay Munname Maidoridante ; Belakam Needay ! Innomme haridu Kathale, Munnina Chaithanyadoje mereyali, Pampa !’ 208. I now commend the Budget Estimates 2005-06 for the consideration and approval of the House. The full budget would be discussed on the floor of the House. The Government will then seek approval of the full budget. I now seek a Vote an Account for a period of four months ending 31st July, 2005. Jai Hind – Jai Karnataka |
