Fuel prices go northwards

Petrol and diesel will cost more by 50 paise and 46 paise per litre respectively (considering the present base price) from April 1 with Chief Minister Siddaramaiah deciding to increase sales tax by one per cent on the two commodities.

Siddaramaiah, who holds the finance portfolio, said the move was necessary as reduction in petrol and diesel prices over the last few months following the fall in global crude oil prices resulted in a shortfall of Rs 500 crore in the commercial taxes department for the fiscal 2014-15.

Petrol and diesel are already highly taxed in the State and have been kept out of the Value Added Tax (VAT) regime . The one per cent hike will result in sales tax on petrol being charged at 27 per cent from the present 26 per cent and sales tax on diesel at 16.65 per cent from 15.65.  In addition, five per cent entry tax which is levied on every litre of petrol or diesel coming into the State will continue. According to sources in the government, the increased sales tax would fetch the department not less than Rs 500 crore.

However, Siddaramaiah tried to put it differently. “The Government of India has raised excise duty on petrol and diesel on four occasions. I, propose to increase the tax rate on diesel and petrol by a modest one per cent keeping in view the need for resources for the larger interest of the society,” he said.

For smooth transition from Value Added Tax (VAT) to Goods and Services Tax (GST) regime from April, 1, 2016 , Siddaramaiah said Electronic Upload of Purchase and Sales Statements system for traders would be strengthened.

The existing VAT slabs have been retained. VAT slabs had been hiked from 5 to 5.5 per cent and from 14 to 14.5 per cent in August 2012 for one year. The then BJP government had hiked the slabs to mobilise Rs 1,000 crore for drought relief and to fund crop loan and interest waiver scheme for farmers. Siddaramaiah has decided to continue with the same slabs for the financial year 2015-16.

To provide relief to small dealers the registration limit has been enhanced from turnover of Rs 7.5 lakh per annum to Rs 10 lakh per annum. There is some succour by way of  VAT rate reduction on  footwear, handmade floor mats, table mats made from rubberised banana fibre, wick stoves, manufactured sand, industrial cables, mobile phone chargers and solar PV panels. These commodities are likely to cost less.

Professional Tax
From April 1,  persons drawing salary less than Rs 15,000 per month need not pay professional tax with Siddaramaiah increasing the present limit of Rs 10,000 per month. The effective age of senior citizen from the current 65 years has been reduced to 60 years to extend the benefit of exemption from payment of profession tax.

Siddaramaiah though claimed that the department would be able to reach the revenue collection target of Rs 42,000 crore, did not announce how much has been collected so far. The next year target is fixed at Rs 46,250 crore.