JOIN USThe State’s reaffirmation for supporting the introduction of GST and to prepare the industry/government departments is welcome. While we have been speaking about GST for the last four years, the trade and industry believes that there is no certainty on implementation of the GST regime.
The budget estimate for the year 2013-14 of Rs 120,717 crore is revised to Rs 112,422 crore with an increase of 28 per cent in the revised plan expenditure. The chief minister has stated that, overall the fiscal parameters are within the mandate of the Karnataka Fiscal Responsibility Act which necessarily means that the plan expenditure would have been cut down to meet fiscal parameters.
The trade and industry strongly believes that they have been let down since the rate of tax has not been reduced by 0.5 per cent even in this budget whereas it was promised on the floor of the house in the year 2012 that the increase was only for one year.
The chief minister has proposed to introduce VAT at 5.5 per cent on liquor. The pre-cursor to this is that the state believes the value addition that takes place at the stage of retail sale of liquor is escaping the tax net. Liquor, which has for the last 14 years been kept outside the ambit of commercial taxes (earlier, KST and now VAT), is being brought into the tax net. This will not be appreciated by the hospitality/tourism sector.
Nevertheless, it is heartening to note the following administrative relaxations: Increase in the threshold for registration is enhanced to Rs 7.5 lakh from Rs 5 lakh -- a move towards GST regime wherein the threshold is currently being discussed as Rs 10 lakh.
Currently transactions involving specified goods and certain non taxable transactions envisaging movement of goods whose value is in excess of Rs 20,000 mandatorily require electronic delivery notes in Form e-sugam. This limit has been increased to Rs 25,000 with an expectation that the small dealers would be relieved from the additional compliance burden.
Works contractors are proposed to be exempted from compulsory registration. Enabling filing of revised returns to rectify mistakes, if it has no tax implications; For appeals before the tribunal, filing of one single appeal for one financial year, as against the current scheme of separate appeals for each month; extending the concept of deemed assessment to the entry tax law.
Pro development
Further, the mandatory penalty of Rs 250 for non-filing of returns is proposed to be waived for small dealers who have no tax liability, if they opt for cancellation of registration.
The budget also proposes to re-introduce the filing of annual statement by the dealers. It is being termed as a measure to enable the dealers to avoid disputes on information furnished by them in the returns.
The software and the construction industry, which suffer both VAT and Service tax are left in the lurch without any measures to rationalise the taxes. The trade and industry expected several rationalisation measures relating to input/output taxes based on several judicial pronouncements to alleviate the difficulty of the trade and industry which has been given the go by. It is time that a study was undertaken by the commercial tax department to rationalise all the notifications, circulars, clarifications and advance rulings issued from time to time.
The reduction in the rate of stamp duty to a uniform rate of 2 per cent from the current 6.5 per cent levels for all joint development agreements and their consequent powers of attorney, will augur well for the industry already crippled with high costs and will increase the compliance levels.
While the thrust of the budget appears to be very high on the development of Bangalore, we need to wait and watch the actual implementation of these projects. A lot more has to be done to address the regional imbalances, if the state has to witness a booming economy. A simple question on my mind is - has Bangalore seen the budgetary allocation of the previous year fully spent on Bangalore. If yes – do we see that improvement in Bangalore?
Overall, this budget exercise of the state government is aimed with the ensuing elections in mind and all the above measures will be dealt by notifications/circulars in the near future.
(The writer is with the Bangalore Chamber of Industry and Commerce)