Many new items in tax net

By Our Kerala Bureau

THIRUVANANTHAPURAM, JULY 13. Departing from the convention of presenting a soft budget during the honeymoon period with the people, the Kerala Government has come out with a revised budget which jacks up rates and brings many new items within the tax net in order to overcome the worst financial crisis.

The Finance Minister, Mr. K. Sankaranarayanan, who presented the budget in the Assembly today, did not spare even branded bread and bun and medicines given to patients by hospitals to raise additional resources to the tune of Rs. 456.40 crores.

The additional expenditure announced by him comes to Rs. 178.26 crores. The budget envisages revenue receipts totalling Rs. 10,626.17 crores, revenue expenditure amounting to Rs. 12,991.26 crores with an overall deficit of Rs. 140.68 crores and a closing cash balance of Rs. 447.91 crores.

The Minister prefaced his budget speech with a scathing attack on the previous Government for its financial mismanagement which, he argued, brought the State to the verge of bankruptcy.

The Opposition described the financial statement as one which blocked development, obstructed the process of decentralisation and penalised the people.

The Minister said that the Government proposed to raise Rs. 225 crores by imposing an additional sales tax of 15 per cent which was applicable to all goods other than petrol, diesel and LPG and liquor including beer and wine.

It decided to levy a turnover tax of 1.5 per cent on all goods other than petroleum products and some other items at the non- taxable point. It would be applicable to assessees having a turnover of Rs. 30 lakhs or more. He expected to mobilise Rs. 90 crores from this area.

The Government hoped to raise an additional revenue of Rs. 74 crores by raising the tax on foreign liquor from 85 to 90 per cent and on beer and wine from 55 to 60 per cent. The turnover tax on bar hotels was raised from 5 to 10 per cent and the licence fee for bars from Rs. 13 lakhs to Rs. 15 lakhs.

The other proposals included a 4 per cent tax on branded bread and bun, application of the tax on medicines supplied by hospitals, 4 per cent tax on silk saris, tax on coffee sold in auction at the point of auction itself, revision of the compounded tax being levied on granite metal crushing units commensurate with their capacity, withdrawal of the exemption allowed to printing presses undertaking printing on contract basis and introduction of a licence fee on distributors and stockists of lotteries.

The other measures included an amnesty scheme of sorts to encourage all eligible dealers to get registered, treatment of branches of jewelleries as independent units for the purpose of compounding tax, removal of the ambiguity with regard to the liability of distilleries selling liquor to the Beverages Corporation on the turnover of such liquor, removal of ambiguity in the definition of organic manure, toning up of the intelligence and investigation wings of the Commercial Taxes Department, making of abetment of tax evasion an offence, simplification of the procedure for remittance of sales tax, setting up of a Settlement Commission to bring down the quantum of arrears of ST and Agricultural Income Tax and the imposition of interest on belated payment of luxury tax.

The major concessions included the exemption of all agricultural income tax assessees other than companies from paying AIT for one year in order to help them tide over the crisis being faced by the agricultural sector.

The Minister reduced the tax on all goods included in the Government's Information Technology policy from 8 to 4 per cent to encourage the development of the IT.

He declared the Government's resolve to introduce VAT from April 1, 2002 in accordance with the decision of the Chief Ministers' conference held in New Delhi earlier this month.

He indicated that the tax base would be widened in order to make good the fall in revenue collection during the initial years. The Minister announced the Government's decision to prune the size of the annual plan from Rs. 3,600 crores to Rs. 3,015 crores.

Some of the innovative proposals included the involvement of the private sector in public infrastructure strengthening and industrial growth for which a legislation was under consideration and the setting up of an investment growth fund with the help of the non-resident Malayalis.

As the Government has already made it clear, the budget gives thrust to the IT and tourism sectors.

It has set apart Rs. 41.95 crores for the former for developing Kerala as a major IT destination of the country and Kochi as the IT capital of the State and Rs. 39.66 crores for the latter. The outlay for education is Rs. 2,958.55 crores and for health it is Rs. 753 crores.

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Section  : Southern States
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