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Budget today, but GST kills the tax suspense
March, 01st 2017

Four months before the implementation of the proposed Goods and Services Tax (GST), which is supposed to bring uniformity in indirect tax rates and structures across the country, the Shivraj Singh Chouhan government is not likely to levy new taxes in the state Budget to be presented on Wednesday.

Taxes coming under the purview of the state include sales tax, tax on electricity consumption, stamp duty, entertainment tax, and entry tax on goods from other states. However, the challenge before the government is - how to strike a balance between fiscal prudence and politics (read Assembly elections, 2018) when It allocates funds for 2017-18, sources said.

Talking to TOI, state finance minister Jayant Mallaya said, "GST is likely to be introduced from July. To levy or not to levy tax now is a matter of zero consequence."

"Whatever is done now (before GST) will be for three months only -- from April to June 30. Whatever we are going to get from the Centre will be assured for five years", he added.

GST will subsume several indirect taxes levied by the Centre and the states on goods and services. This includes taxes imposed by the Centre like service tax and Union excise duty, as well as those by states -- sales tax, goods and passenger tax.

O P Dhoot, president, Association of Industries Madhya Pradesh (AIMP) said, "Any major change in state taxes is not expected because GST will be implemented soon. The government may increase taxes on items falling over 28 per cent VAT, such as petroleum products, as it would come under the state's control."

"Budget of MP for 2017-18 will be a formality as far as the revenue part is concerned. Since GST roll-out is scheduled for July 1, there is no sense in changing tax rate. But the finance minister may change some classification of goods looking at the post-GST scene," said Goutam Kothari, president of Pithampur Audhogik Sangathan. "Now, the important part of the budget will be allocation of funds. If development is targeted, it would be a welcome step," he added.

According to AIMP, entertainment tax could be increased in the budget, followed by taxes on petroleum products, to increase states revenues. Industrialists expect the finance minister to increase allocation of funds for infrastructure and industrial development in the state, to heal the demonetisation wounds.

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