Delhi Finance Minister Manish Sisodia presented a ‘please all’ Budget for 2016/17. It can be very well termed as Aam Aadmi Budget as there is zero taxation on the common man. Sweets, namkeen (snacks), clothes and shoes above Rs 500, readymade garments above Rs 5,000, e-rickshaw, battery operated vehicles, hybrid automobiles, marble and watches above Rs 5,000 will be cheaper as VAT on these items has been slashed from 12.5 per cent to 5 per cent.
Governemnt also kept circle rates unchanged.
The threshold limit of luxury tax is proposed to increase from Rs 750 to Rs 1,500.
Presenting his second Budget on Monday, Sisodia said the Government is committed to reducing tax arbitrage and will attempt to keep a uniform rate with neighbouring States.
Also, the Government has proposed to continue power subsidy of Rs 1,600 crore to the consumers; Rs 10 crore to aam admi canteen to provide good and hygienic food; Rs 350 crore for swaraj fund scheme that to be extended in all 70 constituencies for development and Rs 100 crore for CCTV cameras in all classrooms in Government-run schools.
The education, health and transport are the core area of the Arvind Kejriwal Government and maximum allocation was made to these three sectors.
The total Budget is proposed to be Rs 46,600 crore that include Rs 20,600 as plan Budget and Rs 26,000 crore as non-plan Budget as compared to Rs 41,129 crore in the fiscal year 2015-16. The plan outlay which was budgeted and approved for Rs 19,000 crore is proposed to pan out at Rs 16,400 crore in the revised estimates 2015-16.
Presenting the Budget proposals of the Delhi Government, Sisodia also cited Union Finance Minister Arun Jaitley’s view point pertaining to division of expenditure under plan and non plan, saying this conventional segregation of expenditure is artificial in nature and the aam admi may best understand the budgetary allocations by segregating expenditure in terms of initial cost and recurring cost of project /scheme/programe.
“To promote environment friendly vehicles, VAT rate on e rickshaws, battery operated vehicles and hybrid automobiles is to be reduced from 12.5 per cent to 5 per cent. VAT on sweets and namkeens (snacks) are proposed from 12.5 per cent to five percent to rationalise the tax rate at par with Haryana and Uttar Pradesh where VAT on these items are five per cent. Currently, VAT on sweets and namkeens are 12.5 per cent. The readymade garments up to Rs 5,000 are taxed at five per cent those above Rs 5,000 are taxed at 12.5 per cent while it is five per cent in Haryana and UP. To rationalise the VAT, it is proposed five per cent VAT on all readymade garments. The VAT on marbles is also proposed to reduce from 12.5 per cent to 5 per cent”.
“In several items such as sweets - namkeen, watches, readymade garments, lower tax rate in neighbouring States were causing erosion in the same. We have made efforts to remove such imbalances in our VAT structure,” Sisodia said.
According to proposals, watches in Delhi are taxed differentially at 12.5 per cent (watches up to Rs 5000) and (20 per cent watches above Rs 5,000), while they are taxed uniformly at 12.5 per cent in neighbouring States. To uniformity in the rate, VAT on all kind of watches is proposed to be 12.5 per cent. Similarly, textile and fabric are presently covered under several entries in the tax rate. Some of them are exempted and some in the taxable category of five percent. Except khadi and handloom fabrics, five percent VAT to be levied on all variety of textiles and fabrics including sarees.
Plastic wastes continue to be exempted whereas five per cent VAT is applicable on plastic raw materials such as plastic granules, plastic power and master batches. Now it is proposed five per cent VAT on plastic waste. Presently, inverters and UPS are taxable at general un-specified rate of 12.5 per cent which is proposed to be omitted from schedule III. Presently, footwear above Rs 500 is taxable at the rate of 12.5 per cent. To bring uniformity, the Budget proposes of VAT of five per cent to all footwear irrespective of price. The VAT is also proposed on all school bags of five per cent. Presently, school bags having price of Rs 300 and above Rs 300 are taxed at five per cent and 12.5 per cent. In the existing entry of Ferrous and Non-ferrous metals, there is no mention of aluminium or metal sheets, and some items are taxed at higher rate of 12.5 per cent. To remove an ambiguity, it is proposed to modify the entry as “Ferrous and non-ferrous metals and alloys thereof including their sheets, foils and extrusions. Non-ferrous metals included aluminium, copper, zinc etc.”
The tobacco and tobacco products are currently taxable 20 per cent. The relevant entry reads as under: 40 “Tobacco and Gutkha, unmanufactured tobacco, bidis and tobacco used in manufacture of bidis and hooka tobacco”. In order to make it more comprehensive, the Government proposed to modify
the entry as under: “Un-manufactured tobacco, tobacco and tobacco products in all forms such as cigarettes (irrespective of form and length), chewing tobacco, gutkha, cigars, hookah tobacco, khaini, zarda, surti, bidis etc.”