Guj budget: new tax on old vehicles, tobacco-based products

PTI | February 25, 2010

The Narendra Modi-led Gujarat Government on Thursday presented budget for 2010-2011 with estimated revenue receipt of Rs.49,476.53 crore while state's annual plan size has been fixed at Rs.29,500 crore clocking an increase of 25.5 percent in the annual development plan.

The budget, according to the state finance minister Vajubhai Vala, emphasises on "aam adami, farmers and women" and is "development-oriented."

Though the state has increased budgetary provisions for various welfare programmes and schemes, the government has not given any relief in the tax segment and instead imposed 15 per cent tax on resale of vehicles and has increased VAT on tobacco and its products from 15 percent to 20 percent.

By increasing VAT on the tobacco and its products and imposing tax on sale of second hand vehicles, the state is likely to collect Rs 130 crore annually.

Moreover, the state has also imposed conditional tax of Rs 600 crore by reducing tax credit by two per cent on purchase of goods made from within the state and used in interstate sales.

This reduction in the tax credit, the finance minister later clarified, is conditional and will be implemented with effect from July 1, 2010 if the central government does not compensate for losses of the central sales tax (CST) revenue for the year 2010-11.

Vala in his budget speech said that the Centre has agreed to pay compensation to the states for the losses on account of reduction in CST.

"Accordingly, a formula was declared by the Centre but the states have suffered losses due to subsequent and unilateral changes made by the Centre in the formula," Vala noted in his speech, adding, "Further, the Central Government has not paid full compensation to the state as per the formula."

He added that more than Rs 2200 crore are yet to be paid by the Central Government to the state towards compensation for the years 2007 to 2010.

Meanwhile, the government has increased budgetary provisions for social services to Rs 12,890.61 crore, irrigation and flood control Rs 5670.20 crore, agriculture and allied services Rs 2062.8 crore and transportation Rs 3,198 crore.

The state has also made provision of Rs 3625 crore for Narmada project under which Rs 1000 crore to be provided for creating irrigation facilities in 646 villages in three districts in North Gujarat, Rs 2900 crore to be provided for creating irrigation facilities in Saurashtra along the Saurashtra branch canal and Rs 940 crore for branch canal and allied works in arid Kutch district.

Financial provisions have also been increased for other sector like education Rs 1900 crore, water supply Rs 1849.25 crore, 1900 crore for health, Rs 896.22 crore for women and child development, Rs 934 crore for rural development, Rs 740 crore for panchayat and rural housing, Rs 3015 crore for urban development and housing and Rs 2927 crore for roads and buildings.

For welfare of scheduled tribes, a provision of Rs 4103.95 crore has been made while Rs 1331.8 crore provided for the welfare of SCs and Rs 310 crore welfare of developing castes.

By imposing new tax on resale of vehicles, increasing VAT on tobacco-based products and conditional tax the state will mop up Rs 730 crore and estimated overall surplus will be Rs 171.56 crore, said the finance minister.



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