In a significant budgetary announcement aimed at pleasing the trading community in the State, the BJP-led saffron alliance Government on Wednesday proposed to abolish local Body Tax (lBT) with effect from August 1, 2015, but it indicated that it would enhance the rate of Value Added Tax (VAT) to compensate the revenue losses suffered on account of the abolition of lBT by various municipal corporations, excluding Mumbai – a move that is bound to affect the people across Maharashtra.
Presenting a Rs3,757 crore revenue deficit Budget for 2015-16 in the Maharashtra Assembly. State Finance Minister Sudhir Mungantiwar came up with new taxation proposals which would result in a net revenue gain of Rs643 crore to the State exchequer.
Among the additional revenue mobilisation proposals that the Finance Minister announced were: 5 per cent entry tax on import of long Steel in the State, increase in tax rate from five per cent to 12.5 per cent on plain and pre-laminated particle board and a revision in excise duty rate on country liquor at 200 per cent of manufacturing cost or Rs120 per proof litre, whichever is higher.
In twin moves that are bound to increase the housing stock and also contribute to the increase in the real estate prices in Mumbai, the Finance Minister proposed to proposed to Floor Space Index (FSI) limit from 0.33 to 0.60 and increase the rate of premium in the Brihanmumbai Municipal Corporation (BMC) limit. He said that the State Government was considering enhancing the rate of premium on grant of all kinds of additional FSI. “The Government intends to grant timely permissions, simplify procedures and charge legitimate premium on additional benefits,” he said.
In one of the populist measures aimed at keeping women in good humour, Mungantiwar announced that no profession tax would be applicable to those women drawing salary up to Rs10,000 per month. This would benefit nearly 1.50 lakh employed women in the State. The tax concession for women should seen in the light of the fact that profession tax is applicable to all persons drawing salaries above Rs7,500 per month.
The other people-friendly measures that the Finance Minister announced included: reduction in tax on lED bulbs from 12.5 per cent to five per cent, tax exemption on exercise books, drawing books, laboratory notebooks and graph books (on which there is currently five per cent tax), exemption of tax on certain medicines required for treatment of cancer, reduction in tax on guide wire required for medical treatment from 12.5 per cent to five per cent and continuation of exemption of tax on some of the essential commodities like rice, wheat, pulses, their floor, turmeric, coconut and jiggery till March 31, 2016.
Fulfilling the BJP’s poll promise of abolishing lBT in the State, Mungantiwar said that the State Government would do away with the levy from August 1, 2015 and generate the loss of revenues amounting to Rs6,875 crore suffered by 25 municipal corporations across the State by way of increase in VAT.
“Due to abolition of local Body Tax, a compensation of Rs6,875 crore will be required to be given to the Municipal Corporations excluding Mumbai. This loss of revenue will be compensated by enhancing rate of tax under Value Added Tax Act. The enhanced rate of tax will be applicable to the whole State,” Mungantiwar said.
Treading cautiously on the issue of the quantum of increase in the rate VAT, Mungantiwar said: “A Revenue Neutral Rate has been recommended considering the share of increased tax collection to be given to the areas where local Body Tax is not levied. ..Extensive deliberations are required on the enhancement in tax rates under Value Added Tax”.
The Finance Minister said that since the BMC “gets substantial revenue, by levying Octroi on Crude Oil and that “the Octroi amount is collected by Oil Companies as part of State Specific duty from all consumers in the State”, the state government would consider this aspect while deciding on the increase in the VAT rates.
The budget, which incidentally is the maiden one presented by the BJP-led saffron alliance government after it assumed in November last year, is a clear reflection of Prime Minister Narendra Modi’s vision and fiscal planning for the country. Apart from giving a push to ‘Make in Maharashtra’ initiative -- inspired by Modi’s ‘Make in India’ move, the Devendra FAdnavis government has laid emphasis on the ‘Swachha Bharat Abhiyan’, for which an outlay of Rs 320 crore has been earmarked.
Similarly, along the lines of the ‘Sansad Adarsh Gaon Yojana’ under which an MP will develop select gram-panchayat through convergence of various schemes, the Fadnavis government has proposed to launch ‘Aamdar Adarsh Gaon Yojana’, in which an MlA would take up projects on similar lines.
Along the lines of Pradhan Mantri Gram Sadak Yojana, the government has launched Mukhya Mantri Gramin Marg Yojana, for which the state government has made an allocation of Rs 2,760 crore A scheme ‘Mazi Kanya Bhagyashree Yojana’ on similar lines of ‘Beti Bachao Beti Padao’ has been launched. For the ‘Smart Cities’ project, an outlay of Rs 268 crore has been proposed.
On the skill development front, the state government has proposed to merge various schemes and name the unified scheme as ‘Pramod Mahajan Skill Development Programme’. In another initiative, Mungantiwar also announced the launch of ‘Pandit Dindayal Upadhyay Gharkul Jaga Kharedi Arthasahayya Yojana’, to target over two lakh beneficiaries. The government also intends to bring in a new scheme named ‘Shyamaprasad Mukherjee Jan Van Vikas Yojaya’.
Apart from reiterating its commitment to set up memorials for late Balasaheb Thackeray and Gopinath Munde in Mumbai and Aurangabad, respectively, the Finance Minister proposed an allocation of Rs 100 crore for the Chhatrapati Shivaji Maharaj memorial, proposed to be set up in the Arabian Sea. The government also announced necessary funds for the memorial of late Dr Babasaheb Ambedkar in the defunct Indu Mill complex.