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I now go to the tax proposals. 206. 1. Sir, I am happy to inform that as in the previous years revenue mobilization in the State during the current year is also good. We would be exceeding the targets fixed in the previous Budget under different taxes. COMMERCIAL TAXES: VALUE ADDED TAX: 207. Sir, Value Added Tax has been introduced in the State from 1st April, 2005. Except for the initial hurdles, it has been implemented successfully. Though the full benefit has not reached the consumers by way of reduction in prices, the trade and industry in the State have benefited immensely from this. During the first year of introduction of Value Added Tax, as compared to the earlier sales tax system it was estimated that there would be reduction of about 2,160 crore rupees in our tax revenue. As per the latest estimate it is expected that the shortfall in revenue would be about 1,200 crore rupees. This is a good development and it has encouraged me to implement the new tax system much more effectively. As per its assurance the Central Government has been compensating the State towards shortfall in revenue. We are expecting the same kind of co-operation from the Central Government on the issues of reforms in Central Sales Tax and tax on services. 208. In order to effectively implement Value Added Tax some changes were made in the organizational structure of the Commercial Taxes Department. In the background of our one year’s experience in this regard, I propose to make some more changes and make implementation of the new tax system much more effective. Reliefs 209. The Associations of Trade and Industry have requested for several tax exemptions, reductions and other concessions. As already informed to this house the design of Value Added Tax system has been evolved based on the consensus of all States and the State cannot make modifications in this. In this background, within the space available to the State I have considered a few requests. 210. Accordingly, I propose to exempt, (1) Paddy, Rice, Wheat, Pulses, Flour and Soji of Rice and Wheat, and Maida of wheat for a further period of six months, (2) Animal shoes, (3) Certain parts of animal driven carts and (4) Chunni of pulses. 211. I also propose to reduce tax to 4% from 12.5% on (1) poha of maize, (2) spent and cut dry chillies, and dry chilly seeds, (3) handmade soap, (4) surgical gloves, (5) all compact disks, (6) cold tar, (7) certain test and measuring equipments and (8) Biological Control Agents (9) Packing material with lining (10) certain goods of daily necessity sold by canteen stores department to defence forces. 212. I also propose to add a few more goods to the notified list of industrial inputs and capital goods and revise the list of I.T. products. I propose to a) to permit rebating of input tax on capital goods in one month instead of 12 months, b) extend the composition tax facility to bakeries and all stone crushing units and c) subject to certain conditions permit works contractors enjoying the composition facility to purchase goods from outside the State and give deduction on their sub-contractors turnover. Rationalisation Measures 213. I propose to introduce the facility of direct remittance of refund amounts to the bank accounts of the dealers and certain other rationalization measures in the Value Added Tax Act. The details of these measures are at Annexure II. 214. Further, to smoothen transport of goods within the State I propose to abolish internal checkposts on Tumkur Road (outward) and Mysore Road. SALES TAX Relief 215. I propose to exempt resale tax on sale of petrol and diesel by the oil refinery at Mangalore owned by ONGC. Rationalisation measure
216. Though
after introduction of VAT the earlier Sales Tax is applicable only on a
few commodities, the number of cases in which assessments are pending for
the earlier years is enormous. In the interest of administration, they
need to be disposed urgently. Accordingly, I propose to bring in ENTRY TAX Relief 217. I propose to exempt tax on beedi leaves, rubber tyres and tubes. 218. To encourage exports to other countries from the refinery in Mangalore, I propose to exempt entry tax on crude oil used in the manufacture of petroleum products exported. SPECIAL ENTRY TAX Rationalisation measure: 219. To prevent diversion of trade, I propose to levy tax on a few more commodities.
AGRICULTURAL INCOME TAX Relief 220. Considering the continuing losses suffered by coffee growers, I propose to exempt tax on all growers other than firms and companies and reduce tax on firms from 40% to 30% and companies from 50% to 35%. Rationalisation measure 221. I propose to provide for collection of interest even during the period of stay in disputed cases. ENTERTAINMENT TAX Reliefs: 222. I propose to exempt tax on magic shows and sports. 223. I propose to reduce compounding fee levied on offences not relating to tax evasion.
Rationalisation measures 224. I propose to, levy tax only on multi-system operators to effectively collect tax on cable television, exempt tax on their cable operators and exempt disputed tax on multi-system operators for the earlier years. 225. I propose to fix a uniform limit of admission for tax exemption instead of the current different limits fixed for entertainment events other than films and cable television in urban and other areas. 226. To effectively curb tax evasion, I propose to give certain powers to Entertainment Tax Officers. PROFESSIONS TAX Rationalisation measures 227. I propose to provide for the insurance companies and banks to deduct and pay professions tax payable by insurance agents and pigmy agents receiving commission from such insurance companies and banks. 228. I propose to levy tax on owners of transport vehicles instead of holders of permits and fixed time limit for recovery of tax. BETTING TAX Relief 229. I propose to reduce the Composition tax amount payable by Mysore Race Club from 4% to 2%. 230. 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 231. Regulation of excise sector without curtailing freedom of the industry will be the focus in the current year. Towards this end, it is proposed to closely monitor the sale of arrack. 232. The distribution of liquor has been working smoothly through Karnataka State Beverages Corporation from the year 2003-04. In this background, it is proposed to abolish the wholesale licences (CL-1) given to the private individuals with effect from 01.07.2006. 233. I intend to mobilise an additional revenue of Rs.300 crores as follows:- a) By direct Sale of liqour to licences by the Karnataka State Bevarages Corporation ...Rs. 125 Crores b) By restructuring of Excise duty and Additional Excise Duty ... Rs.175 Crores 234. At present, excise duty is levied at Rs.40 and Rs.55 per bulk litre depending upon the value of liquor. In order to rationalise duties, I propose to levy an excise duty of Rs.45 per bulk litre irrespective of the value of liquor. 235. I propose to increase the excise duty on beer from Rs.4 per bulk litre to Rs.5 per bulk litre. 236. In order to rationalise duties, I propose to revise the declared price slabs of liqour and rates of additional excise duty levied on liquor as in Annexure-III 237. At present, the manufacturers of liquor have the option to revise the declared price of liquor thrice in a year. In view of the proposed rationalisation of excise duty and additional excise duty, the manufacturers of liquor, in addition to the existing provisions in regard to the revision of declared price, may have the option to revise the declared price with effect from 1st April, 2006. 238. At present, the establishment charges towards salary and allowances payable to the Excise staff deployed to distilleries, breweries, wineries, arrack manufacturing and other units are borne by the respective manufacturing units. The expenditure on this to the manufacturing units is about Rs.3.80 crores per annum. It is proposed to discontinue this practice and to bear the said expenditure by the Government. 239. The above provisions will come into force with effect from 1st April, 2006. 240. In the backdrop of the policy to blend ethanol with petrol, the issue of production of ethanol (Rectified Spirit) from molasses has assumed great significance. Since this development poses the possibilities of decrease in availability of rectified spirit for potable and medicinal purpose, it is proposed to permit production of rectified spirit from sugarcane juice, different kinds of grains, tapioca etc. in addition to molasses. 241. At present, in respect of liquor imported from outside India, a special fee is being levied. In order to create a level playing field between the domestic liquor and liquor imported from outside India, in lieu of sales tax, a special fee will be levied at the same rates as that of additional excise duty as applicable to liquor manufactured in India. This provision will come into effect from 1st April, 2006. 242. At present, IML licensees are required to pay an additional fee for sale of foreign liquor imported from outside India, besides the prescribed licence fee for sale of Indian Made Liquor. It is proposed to discontinue the practice of charging additional fee from 01.07.2006. 243. In the budget speech for the year 2005-2006, it was proposed to provide an opportunity to clear old excise arrears by extending Karasamadhana Scheme. I now propose to give one more opportunity by extending the benefit of Karasamadhana Scheme by three months from the date of notification to be issued in this regard. Motor Vechicle Tax 244. There is no proposal to increase motor vehicles tax. However, the existing rate of tax in respect of multi-axled and articulated vehicles is higher when compared to the neighbouring States. In order to avoid migration of such vehicles to other States, it is proposed to reduce the tax. 245. Further, I propose to extend the benefit of payment of annual tax on personalized vehicles owned by the employees of Public Sector Undertakings of Government of India including nationalized Banks who are transferable. Necessary amendments will be made to the existing notification. 246. The changes proposed are detailed in the Annexure-IV These measures will result in reduction of revenue to an extent of Rs.10 crores. Stamps and Registration247. The State had embarked upon a set of radical reforms in the field of Stamps and Registration and had taken steps like discontinuation of Stamp Paper, reduction of Stamp Duty and comprehensive computerisation of Sub Registrars offices. The Stamp Duty had been reduced to 8% and in furtherance of the reforms effor, to improve compliance, I propose to reduce the Stamp Duty by 0.5%. This is in line with the commitment given by the State to reduce the Stamp Duty as part of a larger urban sector reform package under the Jawahar Lal Nehru National Urban renewal Mission. 248. I propose to increase the Sub Registry offices in Bangalore Urban District to render better service to the general public, in view of a large number of documents registered in each office, which will ensure compliance of Acts and Rules and realization of revenue. 249. It is proposed to revise the guidelines values of properties in Urban and Semi Urban areas of the State as the Real Estate market is buoyant in these places 250. I propose to amend Section 45-A of Karnataka Stamp Act 1957, wherein the Regional Revenue Commissioner of the Division is being vested with powers to hear appeals in Under Valuation cases and also to bring the penal provisions under Section 45(A)(2) and 45(A)(3) which are, at present, provided under Section 45(A)(5) of the Act. 251. I also propose to amend some of the Articles in the Schedule to the Karnataka Stamp Act 1957, taking into consideration the legal pronouncements on the recitals in the Deeds, for the realisation of revenue to the State. 252. An explanation is being added to Article 6 of the Schedule for levying the Stamp Duty on the Deposit of Title deeds. 253. Article 14 is being amended to tax the re-conveyance of property styled as cancellation. 254. Article 30(C) is being amended to rectify the anomaly in Column 3; Article 30(D) is being added to levy Stamp Duty on the Security Deposit in a Lease Deed, which infact is money advanced, chargeable to Duty. 255. Article 53 is being amended to levy Stamp Duty as conveyance if the remaining period of Lease, in a transfer, is above thirty years. 256. The Roads connecting Hospet-Karwar, Dharwar-Anmod, Chicknayakanahalli and Hassan are damaged due to heavy truck trafic carrying iron ore. The damage is more due to the excessive pay load carried by these trucks. Computerised checkposts at appropriate places would be established and toll would be collected. With this, it would be possible to check the damage of the roads due to excessive pay loads. In adittion, it would be possible to create a fool proof data base on the iron ore transports. A sum of Rs.5 crores is earmarked for this purpose. Revised Estimates 2005-06
257. The Revised
Estimates of total receipts are Budget Estimates 2006-07
258. The total
receipts are expected to be 259. Government expects to raise Rs. 22533.79 Core in tax revenue and Rs. 4088.43 Core in non-tax revenue. In addition, Government expects to raise Rs. 1179.41 Crore as total loans from the Central Government and Rs. 1200.00 Crore from RBI and other Financial Institutions. 260. The Revenue Surplus and Fiscal Deficit for 2005-06 RE is Rs.1186.79 Core and Rs. 4764.09 Crore which is 0.71% and 2.85% of the GSDP. The Revenue Surplus and Fiscal Deficit for 2006-07 BE is Rs. 1534.54 Core and Rs.5210.56 Crore respectively which is 0.83% and 2.82% of the GSDP. This is as per the Karnataka Fiscal Responsibility Act, 2002. 261. It is my desire that the result of implementation of various programmes mentioned in this budget must come to the knowledge of the legislature. I believe that it is only through such deliberations that a frame work would be available for proper application of public funds; even misuse of resources are also controlled. 262. In order to ensure proper utilization of resources in the area of Irrigation, Infrastructure, Health, Education and other sectors, I propose to constitute expert committees and would like to come out with reports to facilitate public debate. 263. We wish to involve all the people and communities as our partners in our effort of building a strong and able, comprehensively developed Karnataka. We are committed to protect the interest of all groups as desired by Sri Jagajyothi Basavanna. We will strive for progress and equal opportunity for everybody. 264. Sir, to say a few words at the end about the Budget, · This is a light budget as there are no additional tax burdens. · This is a rich budget as it is full of resources. · This is a dependable budget as it gives a sense of comfort and support to the women. · This is a budget, which meets the expectations of the farmers and alleviates their sufferings. · This is a budget, which is responding to the pains of Dalits, Backward Classes and Minorities. · This is a Budget, which makes our land, language, arts and culture to shine. 265. I have the satisfaction of having responded to the desires and aspirations of the peoples of our State. I enjoy the pride of taking Karnataka in the path of fiscal discipline.
266. At the
beginning of Vyanama Samvatsara 267. I now commed the Budget Estimates 2006-07 for the consideration and approval of the House. The full budget would be discussed on the floor of the House. The Government will than seek approval of the full budget. I now seek a Vote on Account for a period of four months ending 31st July, 2006.
Jai Hind – Jai Karnataka |
