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Tax proposals to boost revenue
March, 23rd 2010

Consumers especially those of mobiles and Indian-made foreign liquor may be a worried lot, but the state stands to make sizeable gains from finance minister Asim Dasgupta's tax proposals.

While Dasgupta has estimated an additional net revenue generation of Rs 110 crore through his tax proposals, industry experts suggested the hike in VAT and sales tax for these two commodities could result in added revenue of over Rs 400 crore. They feel the nature of demand for these two commodities is inelastic, which will lead to a jump in revenue.

Besides, Dasgupta has doubled luxury tax on hotel rooms that have rent of over Rs 3,000 per day. This is expected to generate additional revenue of Rs 50-60 crore.

According to the budget proposal, the finance minister has revised VAT on cellphones from 4% to 12.5%, an increase of 8.5%. For GSM, the subscriber base is 1.10 crore in the Kolkata circle and 1.97 crore in the West Bengal circle. There are around 40 lakh CDMA subscribers as well.

"A VAT hike of 8.5% on cellphones in the Rs 3,000-plus category implies that for each mobile sold, the state government will get Rs 100-Rs 150. So if 1.5 crore subscribers buy new phones, an additional revenue of Rs 225-250 crore will be generated," a cellular industry professional said.

As far as IMFL is concerned, Dasgupta has proposed to revise sales tax from 30% to 37%. According to experts, this can result in additional revenue of around Rs 150 crore. Currently, the state earns around Rs 1,600 crore from foreign liquor in the form of excise and sales tax.

Secretary of West Bengal Foreign Liquor Manufacturers, Wholesalers and Bonders Association, Parag Mitra, said IMFL sales in the state amounts to Rs 2,500 crore and the government gets a sizeable portion of this figure. Mitra welcomed the budget, saying the sale of foreign liquor would not be affected much by the hike in sales tax.

 
 
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