No impetus for industry: Expert

No impetus for industry: Expert

No impetus for industry: Expert

The State’s support for introduction of GST is a widely welcome measure so far as trade and industry are concerned.

Commercial tax, which constitutes 60 per cent of the State’s revenue, is growing at 16 per cent. It essentially means that better compliances, coupled with increase in tax rates during the year by 0.5 per cent, have kept the revenue buoyant. This is contrary to the economic survey, which pegged the growth at 5.9 per cent against 6.5 per cent for the previous year.

The chief minister would have done well to reduce the rates of tax by 0.5 per cent with immediate effect, rather than from August 1 as notified.

The reduction in the rate of pre-deposit of additional tax demands to 30 per cent for filing of appeals, as against the existing 50 per cent, is a welcome measure. So also, the increase in the time limit for payment of additional taxes to 30 days from the current 10 days is welcome. The reduction in rates of taxes from 14.5 per cent to 5.5 per cent on certain machineries and consumables was long overdue.

Reduction of taxes

The minor loss of revenue in respect of reduction of tax rates in case of de-husking machines, cocoa husk, domestic containers and on footwear costing up to Rs 200 will more than offset by way of better compliance. The construction industry, which suffers both VAT and service tax, is left in the lurch without any rationalisation measures.

For the ensuing fiscal, commercial tax collection is budgeted at Rs 37,000 crore, as against the current year’s revised estimate of Rs 32,000 crore, indicating a 15 per cent increase. While the economic activity is sluggish and the industry is not growing at the estimated pace, one fails to understand the optimism of the chief minister. Effective and efficient administration alone cannot bring in the desired goals.

The budget proposes to rationalise the provisions to enable reassessment in cases where wrong assessments have been made, which is a reflection of the slackness on the part of the departmental officials.

The reduction in stamp duty by one per cent during the current fiscal (from 6 pc to 5 pc) has resulted in its enhanced collection. The chief minister has chosen not to reduce it further (to 4 pc) to align it with the 13th Finance Committee recommendations. This does not augur well.

Capping the stamp duty on JDAs at Rs 1,50,000 as against a registration fee of one per cent is merely scratching the surface and would not mean much to the developer community.

Keeping in mind the commitments made at the GIM, one would have expected the budget to lay down the key indicators of the State Industrial Policy 2014. While the thrust of the budget appears to be on the development of Bangalore, we need to wait for and watch the actual implementation of these projects. A lot more has to be done to address the regional imbalances, if the State is to witness a booming economy. All in all, elections are the focus.

S Venkataramani,
Co-chairman, Indirect Taxes and State Taxes Expert
Bangalore Chamber of
Industry & Commerce

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