The Hindu Business Line : Budget targets the rich in Kerala

HIGHLIGHTS
Major chunk of the additional mobilisation to accrue from the sales tax on gold jewellery.
A uniform luxury tax of 15 per cent will be imposed on clubs, resorts, houseboats, marriage halls and convention centres.
Growers of coffee, tea, pepper and cardamom, except companies, will be exempted from agricultural income tax for one year. Coconut will be exempted from VAT for one year.

THE FINANCE MINISTER, Dr Thomas Isaac, presenting the revised budget for 2006-07 on Friday. - S. Mahinsha

Thiruvananthapuram , June 23

A hike in taxes of select items targeting the rich and measures to enforce better tax compliance are the main features of the proposals contained in the revised annual budget for the current year presented in the State Assembly on Friday by the new Left Democratic Front (LDF) Government in Kerala.

The proposals presented by the Finance Minister, Dr Thomas Isaac, project additional resource mobilisation to the tune of Rs 105 crore and additional expenditure of Rs 228. 28 crore. The overall year-end deficit is put at Rs 716.56 crore.

TAX PROPOSALS

A major chunk of the additional mobilisation is to accrue from the sales tax on gold jewellery, which has been raised from one per cent to four per cent. At the same time, the traders will be allowed the right to claim input credit.

The traders will be given the facility for paying tax under the compounding method and the Government is expecting additional tax accrual of Rs 100 crore from this measure.

The proposals envisage a new list of items attracting 20 per cent tax. The list includes dishwashers, microwave ovens, refrigerators, vacuum cleaners, washing machines, all kinds of wall and floor tiles, marble, granite slabs, paints, enamels and sanitary items. Besides, health drinks such as Boost, Bournvita, Complan and Horlicks and soft drinks such as mineral water, Pepsi and Coca-Cola feature in the list.

The budget also proposes imposition of 12.5 per cent tax on gum, insect repellents, glass fibre and its products. A four per cent tax will be levied on plastic ropes, except fishnets.

A cut in tax from 12.5 per cent to four per cent has been proposed on hearing aids, dialysis equipment, blood tubing and peritoneal dialysis needles.

As part of tax rationalisation, a uniform luxury tax of 15 per cent will be imposed on clubs, resorts, houseboats, marriage halls and convention centres. The tax will be levied on income for these entities, except from cooked food and liquor. Those with annual income of less than Rs 5 lakh will be exempted from paying the tax.

LUXURY TAX

The club members will henceforth be required to pay an annual tax of Rs 100 each. A five per cent luxury tax will be levied from cable operators.

Entry tax will be introduced on coconut oil, copra and PVC pipes and their fittings.

At the same time, paper meant for government use and items brought in by public sector aviation companies for own use will be exempted from entry tax. The entry tax levied on those items and implements brought into the State from other states for temporary use and taken back within a month will be refunded with the permission of the Tax Commissioner.

RELIEF TO FARMERS

In view of the poor condition of the plantation sector, growers of coffee, tea, pepper and cardamom, except companies, will be exempted from agricultural income tax for one year. Similarly, coconut will be exempted from VAT for one year.

The tax on naphtha will be reduced from 12.5 per cent to four per cent taking into account the long-pending demand from the Fertilisers and Chemicals Travancore (FACT).

LOTTERY SYSTEM

In a novel move aimed at encouraging customers to take bills from the traders, the budget proposes issuing of a lottery ticket to those who make purchases for Rs 1,000 and more on bill. District-level draws will be held once in every three months to decide the winners who will be given prizes.

The Finance Minister said that some Latin American countries and China had successfully introduced the lottery system.

The revised budget estimates show revenue receipts of Rs 19,140 crore and expenditure of Rs 24,554 crore, leaving a revenue deficit of Rs 5,414. 82 crore. After taking into account the previous year's deficit of Rs 481.32 crore and the additional expenditure, the overall deficit for the year is put at Rs 716.56 crore.