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Karnataka State Budget 2013

The Hon’ble Chief Minister and Finance Minister of Government of Karnataka has presented the Budget for the year 2013-14 today. The highlights of Budget from VAT perspective are given below:

Commercial Taxes

Value Added Tax

  • Reliefs
    • Tax exemption on paddy,rice,wheat,pulses an products of rice and wheat will be continued for one more year from April, 2013.
    • Tax on arecanut dehusking machine would be reduced from 14.5% to 5.5%.
    • Tax on cocoa husk would be reduced from 14.5% to 5.5%.
    • Taxation scheme on soya bean edible oi manufacturing unit would be suitably modified to give relief to the farmers in the State who are transporting and selling the soya bean grown by them in the neighbouring States because of the current taxation scheme in the State.
    • Tax on purchase of supplementary nutrition food made under the Integrated Child Development Scheme for supply to Children, pregnant women/ nursing mothers and adolescents by Anganawadi Centres run by Women and Child Welfare Department, would be reduced from 14.5% to 5.5%.
    • Tax on domestic containers would be reduced from 14.5% to 5.5%.
    • Footwear costing up to two hundred rupees per pair would be exempted from tax.
    • Tax on doors and window frames and door and window shutters made from waste plastic would be reduced from 14.5% to 5.5%.
    • Air compressors and their parts including engines would be included in the list of capital goods liable for 5.5% tax.
    • Payment of 50% of disputed amount currently required to be made by the dealers for filing appeals against orders demanding tax in excess of the amounts declared by them and for obtaining stay for its recovery would be reduced to payment of 30%.
    • The current time of ten days given for payment of additional tax demanded on assessment and reassessments would be increased to thirty days.
  • Additional Resources Mobilization Measures
    • The State’s total Tax Revenue for 2013-14 is estimated to be Rs.61,012 Crore, with an increase of 18 percent over the Budget Estimate for 2012-13.
    • Rs.3838 Crore is expected to be collected from non-tax revenues. The State Government expects to receive Rs. 14375 Crore by way of the share in the Central Tax and another Rs.14991 Crore as grants from GoI. These revenue receipts are estimated to be supplemented by gross borrowings of Rs.21,532 Crore, non-debt receipts of Rs. 100 Crore and recovery of loans to the extent of Rs.135 Crore.
    • Various State Owned boards and corporations and local bodies are expected to mobilize Rs.6751 Crore through internal resource generation and borrowings made on the basis of their own financial strength and own revenues.
  • Administrative Reforms
    • Sakala initiative is delivering 265 services of 30 departments to citizens across the State in a timebound manner. Since its implementation till January 2013, 1.63 Crore applications have been received, out of which 98% applications have been decided within the stipulated time limit. Karnataka is in the forefront in the country in implementation of the scheme by providing maximum Government services (265) at
      stipulated time. Based on Sakala initiative Central Government is contemplating to bring into effect amendments to laws relating to Public Grievances. World Bank, representative of Bangladesh, Chicago, California University have applauded our Sakala Scheme.
  • Entry Tax Relief
    • In the Budget Estimate of 2012-13, the target for tax collection for the Commercial Taxes Department had been fixed at Rs.31,100 Crore. Subsequently, the same was revised to Rs 32,000 Crore. As in the previous years, the Commercial Taxes Department is likely to exceed the same. I would like to thank the tax payers of Karnataka for their wholehearted cooperation in collection of taxes exceeding the target fixed even in a drought affected year. Commercial Taxes Department has successfully implemented several e-governance
      measures in the recent years and in the current year has made efforts towards providing new services under electronic mode and also simplify delivery of existing services. Provision is being made for electronic payment of taxes and electronic filing of returns prescribed under all Commercial Tax enactments. Further, measures are being taken to improve internal efficiency by converting important functions of the department into electronic mode.
    • For the year 2013-14, without bringing inany additional resource mobilization measures, a revenue collection target of Rs. 37,000 Crore has been fixed for the Commercial Taxes Department and it is hoped that this target would be achieved through efficient and effective administration.
  • Commercial Taxes
    • Increase in the minimum daily lumpsum tax payable by private bookmakers operating in Bangalore and Mysore.
  • Professions Tax Rationalization Measure
    • A revenue collection target of Rs.10,775 crores was fixed for the Excise Department for the year 2012-13 and subsequently, it was given a higher target of Rs. 11,200 Crore. The department has taken all the required measures to achieve the target fixed for 2012-13 and we are sure that it would achieve it. The department has been given revenue collection target of Rs. 12,400 Crore for the year 2013-14 which it would achieve through effective enforcement and regulatory measures.
    • It is proposed to revise the 17 slabs of declared prices relating to Indian Made Liquor by increasing each of them by Rs. 40. The details are in Annexure-2
    • Department is receiving proposals for transfer of retail liquor licence (CL-2) and bar and restaurant licence (CL-9) from one person to another for various reasons. It is proposed to double the licence fee collected for such transfer.
    • It is proposed to provide electronic payment facility for payment of excise duty and other amounts by distilleries and breweries.
    • There has been demand from a long time for online allotment of rectified spirit. It is proposed to systematically allot rectified spirit required by distilleries based on their requirement through a system of online issue of No Objection Certificate. Further, it is planned to provide arms and vehicles required by the departmental authorities to carry out
      their functions and also bring in modernisation measures in the department through computerisation.
    • Karnataka State Beverages Corporation was established for distributing liquor for sale in the State. As the Government grants licence to the Corporation, Government collects privilege fee from the Corporation. As there are wrong interpretations of the scheme of
      collection of privilege fee, it is proposed to retrospectively amend the relevant rules to deem always the privilege fee collected as part of State Government’s income.
  • Stamps and Registration
    • For the year 2012-13, a revenue collection target Rs. 5200 Crore was fixed for the department. Even though, in the last budget stamp duty was reduced from 6% to 5%, I am happy to announce that the department is likely to exceed the target fixed.
    • For the year 2013-14, a revenue collection target of Rs. 6,100 Crore is fixed for the department. In order to achieve this, it is proposed to reorganise and modernise the department.
    • Currently, on Joint Development Agreement and related Power of Attorney there is a registration fee of 1%. It is proposed to fix a cap of Rs. 1.5 lakhs on such fee.
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