The Hindu Business Line : 10% surcharge on big retail chains in Kerala; tax on ATF cut

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10% surcharge on big retail chains in Kerala; tax on ATF cut

Budget proposes Rs 188-cr additional revenue mop-up

Dr Thomas Isaac

Our Bureau

Thiruvananthapuram, March 6 Imposition of one per cent cess on sales tax and value-added tax, a surcharge of 10 per cent on big retail chains and increase in the tax on lotteries are some of the new tax proposals contained in the Kerala Budget for 2008-09.

The budget, presented in the State Assembly by the Finance Minister, Dr Thomas Isaac, on Thursday, has projected additional resources mobilisation to the tune of Rs 188 crore. At the same time, the budget also features concessions amounting to Rs 25.12 crore, which include a reduction in tax on aviation turbine fuel to four per cent.

Revenue receipts

The revenue receipts for the year are projected at Rs 24,935.72 crore and revenue expenditure at Rs 28,302.77 crore, leaving a revenue deficit of Rs 3,367.05 crore. The capital expenditure is put at Rs 1,561.93 crore and after taking into account estimates under various heads, the cumulative deficit for the year has been pegged at Rs 627.40 crore.

The Finance Minister said that the financial commitment on social security schemes was likely to increase in the next three years and the one per cent cess on sales tax and VAT had been proposed to meet the resultant expenditure. The measure is expected to raise additional resources of Rs 100 crore.

Surcharge on biggies

The 10 per cent surcharge on big retail chains, including direct marketing chains, will be levied on those with an annual turnover of Rs 5 crore and which import 50 per cent of the goods from outside the State and sell 75 per cent of the goods directly to consumers. Purchases from first sellers, which are sister concerns, will be deemed as import by the retail chains. The additional resources expected to be raised through the surcharge is Rs 2 crore.

The tax on ordinary lottery draws has been increased to Rs 7 lakh and on bumper draws to Rs 17 lakh under the Kerala Tax on Paper Lotteries Act. This is projected to generate additional resources of Rs 25 crore.

The budget also proposes to amend Kerala Value Added Tax Act to limit the set-off of input tax and refund given on inter-State stock transfers to amounts in excess of four per cent. The expected additional revenue from the measure is Rs 50 crore.

Another proposal, which is expected to bring in Rs 1 crore, is to impose 10 per cent tax under the Kerala Tax on Luxuries Act on rooms in hospitals where the daily rent is Rs 1,000 or more, regardless of the manner in which the amount is billed.

Tax sops

Apart from the reduction in tax on aviation turbine fuel, the concessions include exemption of paper bags from tax while increasing the tax on plastic carry bags to 12.5 per cent; reduction of tax on all kinds of hospital equipment to four per cent; and exemption from tax the sale of ‘prasadam’ and sale of goods received as offerings from devotees by the devaswom boards.

It is also proposed to reduce the tax to four per cent on pulley and clamps; rainguarding compounds; flavours and aromatic compounds; tarpaulin; machine tools, all printing machinery, lathes and their parts; municipal solid waste management equipment and plant; all cycle parts (with effect from April 1, 2005), rugs, mats and carpets made of handloom and cotton; and all types of hangeRs

The tax rate for dealers in cooked food eligible for compounding will be reduced to four per cent. Mobile recharge coupons will be exempted from tax with effect from April 1, 2005, while the film industry will be exempted from levy of VAT on right to use and on copyrights with effect from the same date.

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