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The State Budget for 2012-13 presented to the Assembly on Monday has sought to even out enhanced spending through a matching tax mop-up effort.
Additional resource mobilisation of Rs 1,512.05 crore is being undertaken mainly through migration of VAT slab rates from 4-12.5 per cent to 5 to 13.5 per cent.
REVENUE MOP-UP
The revenue accruing through this exercise alone is Rs 1,000 crore, the Finance Minister, Mr K.M. Mani, told the Assembly.
This was only in keeping with the line being followed by many States in lieu of the loss of revenue to them on account of the steep cut in Central Sales Tax.
The effective revenue deficit (after providing for grants for creation of capital assets) is estimated to be Rs 210.76 crore.
Capital expenditure being committed is estimated to be Rs 6,354.88 crore against the revised Budget estimates of Rs 4,929.15 crore.
DEFICIT BUDGET
The carryover deficits were Rs 605.22 crore at the beginning of the year and Rs 361.24 crore towards the end.
Total exemptions announced amount to Rs 321.40 crore in the Budget estimates for 2012-13.
After setting this off against the additional revenue mobilisation, the year is estimated to leave a deficit of Rs 289.25 crore.
The Finance Minister announced VAT exemptions with respect to some essential items, including pulses and edible oil, in what was the 10th Budget authored by him.
In fact, he proceeded to reduce the rates on these items from the prevailing 4 per cent to 1 per cent to rationalise them with applicable rates for rice.
ROAD TAX
The other major tax revenue mop-up exercise was with respect to road tax, in which the Finance Minister announced a major change in the base of assessing tax.
Tax will now be levied based on the purchase value of the vehicle across graded slabs, again in line with the regime in neighbouring States.
Currently, the tax is arrived at based on a combined base of the respective cubic capacity and purchase value of the vehicle.
The new method of assessment of the road tax is expected to fetch an additional Rs 115 crore to the exchequer.
Mr Mani announced waiver of the social security cess of one per cent applicable on the VAT rate.
CIGARETTES COSTLIER
The rest of the additional revenue is being attempted in the following manner:
Cigarettes and similar class of products except beedi would now invite VAT of 15 per cent (existing rate 12.5 per cent).
Pan masala and other tobacco-based products – 22.5 per cent (20 per cent). These are expected to generate additional Rs 76 crore in revenue.
Plastic carry bags – 20 per cent (12.5 per cent). Full exemption announced for cloth bags.
Social security cess on IMFL is being raised from 6 per cent to 10 per cent. This is expected to generate an additional Rs 90 crore in revenue.
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