MP proposes reduction in VAT on diesel, liquor costly

Bhopal, Feb 27: Madhya Pradesh Finance Minister Raghavji today tabled the state budget for 2008-09 that proposed a reduction of Value Added Tax (VAT) on diesel and some other items and relief in professional tax besides increasing tax on foreign liquor and beer.

Presenting the fifth budget of the state in a row, Mr Raghavji said the total revenue receipt for the next fiscal would be Rs 39,462.79 crore against the total expenditure of Rs 39,362.33 crore, resulting in a net surplus of Rs 100.46 crore.

The government proposed to earn a revenue surplus of Rs 2,839.78 crore, while the fiscal deficit is estimated to be Rs 4,741 crore.

Aimed at providing relief to farmers and consumers, the budget proposed to cut down VAT on diesel from 26 per cent to 25 per cent causing an estimated loss of Rs 85 crore to the state exchequer.

Likewise, some items were exempted from VAT, while rate was reduced on others.

Adopting positive attitude on the demand for relief from professional tax by employees, the budget exempted tax payers with an income of less than Rs 1.20 lakh from professional tax.

Likewise, tax burden was reduced from Rs 1,500 to Rs 1,000 for tax payers with income between Rs 1.20 lakh to Rs 1.50 lakh and from Rs 2,500 to Rs 1,500 for tax payers with income between Rs 1.50 lakh to Rs 1.80 lakh.

Mr Raghavji said relief in taxes would cause an estimated loss of Rs 245.34 crore, while rationalisation of transportation tax and various charges on foreign liquor, beer, spirit and rectified spirit would earn an additional revenue of Rs 45.66 crore.

He said stamp duty on transfer of immovable assets was being reduced by 0.5 per cent in order to encourage registration during transfer of assets. The reduction in stamp duty is expected to cause a loss of Rs 90 crore.

With the objective of resolving problems of cotton and textile mills and promoting exports, the budget proposed to exempt cotton and other man-made fibres from entry tax causing an estimated loss of Rs 20.10 crore. The budget proposed to keep raw materials -- like sponge, iron and iron ore -- used in the construction of induction furnace free from entry tax resulting in an estimated loss of Rs 0.50 crore.

Besides, plastic shoes, slippers and its straps, with a maximum retail price of Rs 250 instead of Rs 150 as earlier, were proposed to be exempted from tax. This would result in an estimated loss of Rs 1.55 crore.

In order to encourage sale of old cars, the budget proposed to reduce VAT on their sale from 12.5 per cent to 1.5 per cent. A loss in revenue to the tune of Rs 10 lakh was estimated.

For providing relief to consumers, VAT has been exempted on 'prasad' distributed by religious organisations, religious posters not used as calendars, camphor, cow urine and products made from it, cooked 'dalia (broken wheat)', 'sattu', sweet items such as 'panjiri', 'murmura', 'batasha' and 'mishri', parched 'chana (chickpea)', brooms without marks and animal shoe.

Similarly, kerosene lantern, kerosene lamps, chimney and its parts, handmade candles, solar cookers, umbrellas and its parts, bamboo baskets, iron-made 'ghamela', 'tasla' and 'tagadi', 'gond (food item)', equipment used in sprinklers and drip irrigation had been exempted from VAT. A loss in revenue to the tune of Rs 1.82 crore was estimated.

VAT has been reduced from 12.5 per cent to four per cent on helmet, pre-recorded audio cassettes and CDs, plywood, blackboard, practical board, foam, plastic foam, rubber foam, synthetic foam, CFL bulbs and tubes with maximum price of Rs 100, earth-moving machines and equipment and their parts and attachments, battery and electricity-driven two wheelers, internal combustion engine, electrical energy meters and aluminum extrusions and profiles. This is expected to cause a loss of Rs 30.87 crore to the state exchequer.

Pointing out that motor vehicle tax was Rs 160 per month on all roads at present, the Finance Minister said controlling of passenger vehicles on main roads was more profitable than in rural roads. In this view, the motor vehicle tax is proposed to be increased from Rs 160 from Rs 240 per seat per month on nationalised 171 main roads, while it is proposed to be reduced from Rs 160 to Rs 120 per seat per month on rural roads.

Motor vehicle tax was proposed to remain Rs 160 per seat per month on all normal roads except those in remote areas. Motor vehicle tax was proposed to be payable at the rate of Rs 120 per seat per month on reserved buses. The government proposed to earn additional Rs 25 crore from this.

Rationalisation of various taxes on foreign liquor, spirit, beer and rectified beer has been proposed, as it had not been changed since the past many years.

The fee on the export of foreign liquor spirit per proof litre, beer per bulk litre and rectified spirit per bulk litre has been increased to Rs 1.00. Earlier, the fee was Rs 0.50, Rs 0.46 and Rs 0.30 respectively. An additional revenue of Rs 385 lakh was estimated.

Bottling fee for manufacture of foreign spirit liquor by local units has been increased from Rs 0.30 to Rs 2.00 per proof litre.

The government proposed to earn an additional revenue of Rs 221 lakh from this.

Bottling fee for national-level foreign liquor manufacturers for sale outside the state has been increased from Rs 2.00 to Rs 10.00 per proof litre. The government proposed to earn an additional revenue of Rs 680 lakh from this.

Bottling fee for beer has been increased from Rs 0.08 to Rs 1.00 per bulk litre. The government proposed to earn an additional revenue of Rs 280 lakh from this.

Bottling fee for national-level manufacturers of beer for sale within Madhya Pradesh has been increased from Rs 3.85 to Rs 6.00 per bulk litre. The government proposed to earn an additional revenue of Rs 322 lakh from this.

Bottling fee for national-level manufactures of beer for sale outside Madhya Pradesh has been increased from Rs 0.38 to Rs 2.00 per bulk litre. The government proposed to earn an additional revenue of Rs 170 lakh from this.

Likewise, proposals to increase fee by the Excise department was expected to fetch the government Rs 20.66 crore additional revenue.

UNI