The Hindu Business Line : Budget aims for more revenue

Thiruvananthapuram March 9 A slew of new taxation proposals, including stamp duty on share transactions and value-added tax (VAT) on cigarettes and tobacco products, and increase in tax and duty rates in certain areas are some of the features of the Kerala Budget for 2007-08.

The budget, presented in the State Assembly on Friday by the Finance Minister, Dr Thomas Isaac, seeks to raise additional resources to the tune of Rs 248.69 crore. At the same time, it also contains proposals for giving tax relief amounting to Rs 71.56 crore in order to "encourage industry and trade".

REVENUE RECEIPTS

The budget projects total revenue receipts of Rs 21,445.76 crore and revenue expenditure of Rs 26,696.92 crore, leaving a revenue deficit of Rs 5,251.16 crore. The capital expenditure is put at Rs 1,319.16 crore.

The public debt for the year is estimated at Rs 5,346.94 crore. After taking into account the additional resource mobilisation of Rs 248.69 crore and new expenditure of Rs 212.13 crore, along with the deficit of Rs 420.25 crore carried forward from the current year, the closing deficit for 2007-08 is projected at Rs 522.13 crore.

The budget proposes levying of stamp duty on share transactions through de-mat accounts and the Kerala Stamp Act, 1959, will be amended for the purpose. If the broker note relates to government securities, the stamp duty will be at the rate of 0.0005 per cent with a maximum limit of Rs 500.

For delivery-based transactions, the duty will be 0.01 per cent with a limit of Rs 250 and for non-delivery based transactions, it will be 0.002 per cent with a limit of Rs 250. For futures and options, the rate will be 0.002 per cent with an upper limit of Rs 250. The Government hopes to mop up additional revenue of Rs 10 crore through the proposal.

It is also proposed to impose stamp duty at conveyance rate on power of attorney executed conferring authority on the agent to transact immovable property. The measure is expected to bring in additional revenue of Rs 50 crore.

VAT ON TOBACCO

Another new proposal is for levying VAT on cigarettes, tobacco and tobacco products, other than beedi and cigars, at the rate of 12.5 per cent. This will come into effect as and when the Centre excludes tobacco from the list of declared goods and till then the rate will be 4 per cent. An additional revenue of Rs 50 crore is expected from the measure.

Life-saving drugs, which had been exempted from tax, will henceforth attract a tax of 4 per cent as in the case of other medicines. This will bring in additional revenue of Rs 8 crore, which will be earmarked for purchase of medicines for government hospitals.

The motor vehicles tax, which is now based on engine capacity in respect of two-wheelers and on unladen weight (ULW) for motorcars, will be changed to ad valorem structure based on the vehicle's purchase value. A uniform rate of 6 per cent ad valorem will be levied for two-wheelers, motorcars, and omni buses for private use at the time of registration new vehicles.

For all other two-wheelers, motorcars and omni buses for private use, there will be an increase of 10 per cent from the existing rate. This proposal is estimated to yield an additional revenue of Rs 80 crore.

In respect of tax concessions, it is proposed to reduce VAT on all items to 12.5 per cent, except for aerated soft drinks, marble and granite. Previously, 20 per cent VAT had been imposed on nine categories of goods and this has been changed to 12.5 per cent in view of trade diversion to other States.

The exemption from agricultural income tax given last year for all assessees other than the corporate sector will be continued for one more year. Similarly, the tax exemption given to coconut will also be continued for one more year.