West Bengal raises VAT rates in Rs. 8-cr. deficit budget
March, 12th 2013
West Bengal Finance Minister Amit Mitra on Monday presented a Rs. eight crore-deficit budget for 2013-14, which proposed to raise value-added tax rates by one per cent, at the lower end as well the higher end.
Mr. Mitra, however, made a break with the tradition of holding post-budget-briefings. It was not possible to ascertain his additional revenue mobilisation plans from these two moves. No elaboration was available on any of the budget moves either.
He also raised tax rates on tobacco-related products and cigarettes from 20 to 25 per cent, leaving untouched the Indian made foreign liquor sector — a kitty his predecessor always dipped into to shore up revenues.
The move to increase VAT rates on items in the lower bracket (of four per cent) and upper bracket (of 13.5 per cent) will cover a very wide gamut of items numbering nearly 100 and including items of daily use by the common man.
“The additional resources generated will help build the much needed social and physical infrastructure and spur economic growth, Mr. Mitra said, adding that the common man will get better infrastructure.
He provided Rs. 26,674 crores for the state plan outlay which was 14.1 per cent higher than a year ago. He said the State will target a 22.8 per cent growth in garnering ‘own tax’ revenues.
Mr. Mitra said that although this government has to bear a debt burden of Rs. 25,000 crore, it has kept its commitment to its employees by paying Rs. 42,000 crore in salaries and pensions.
The target of revenue increase pegged at 25 per cent for the current fiscal has been exceeded as West Bengal was able to increase its revenue collection by 30 per cent, he said.
As such, against the revenue collection target of Rs. 31,000 crore fixed for this fiscal was exceeded with collection standing at Rs. 32,000 crore. “However the tragedy remains that as Rs. 32,000 crore came to our treasury, Rs. 25,000 crore exits it, simply cut off by the RBI to service the massive debt of Rs. two lakh crore thrust upon us by the Left Front government,” Mr. Mitra said.
He mentioned in this context that the State was shocked to find that while 90 million people were left in a financial abyss, the Union government pledged Rs. 50,000 crore to help three euro zone countries.
The budget also announced a Rs. 1500 allowance for the unemployed (in the 18 to 45 age group), who were registered with the employment bank. Mr. Mitra announced a target of employment generation of 13 lakhs in 2013-14. It was not clear whether he meant creation of actual jobs or their potential.
He rolled out a slew of tax reform measures including abolition of compulsory assessment of profession tax, exemption for small resellers and works contractors from payment of purchase tax. He also proposed to introduce a system of simplified registration for unorganised traders, while raising the ceiling of self-audit from Rs. three to Rs. five crore. For the salary and wage earners he raised the limit on paying profession tax to Rs. 7,000 from Rs. 5,000.
Mr. Mitra increased allocation on certain sectors in his budget wherein he also announced new projects. The sectors included agricultural marketing, allocation for MGNREGS, panchayat and rural development, health and family welfare, school education.