• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Our Bureau

THIRUVANANTHAPURAM, March 14

CREATION of a "sinking fund" for debt management, a support fund for traditional industries, a price stabilisation fund for agriculture and introduction of a social safety net for destitutes are some of the highlights of the Kerala Budget for 2003-04 presented in the State Assembly on Friday.

The Budget has also allocated Rs 84 crore for restructuring of the public sector undertakings. However, it does not contain any new tax proposals.

In his Budget speech, which was cut short by the uproar raised by the Opposition demanding a judicial inquiry into the Muthanga incident, the Finance Minister, Mr K. Sankaranarayanan, said the approach adopted by the Government in the current year to encourage tax compliance had yielded results.

In the coming year also, the focus would be on improving mobilisation of revenue, he said. The year, however, is expected to end with a cumulative deficit of Rs 519.88 crore.

The tax proposals contained in the Budget are largely in consonance with the value added tax (VAT) system being introduced in the State from April 1. They pertain to changes made in the tax structure for adapting the new system to the requirements of the State.

The rates of tax on some of the items, which are already higher than the VAT floor rates agreed to by the State Governments, have been increased further. These include telecommunication equipment, beltings and hosepipe, industrial cables and skimmed milk powder (from 12 per cent to 12.5 per cent) and solvent oil other than organic oil, plastic footwear and poultry (from eight per cent to 12.5 per cent).

In the case of presumptive tax for small traders as envisaged in the VAT Bill, the Budget proposes a rate of one per cent. It has also been proposed that the concessional rate of four per cent provided in the Bill for industrial raw materials and packing materials, will be available to only those materials that are used for the production of taxable goods in the State.

The liquefied natural gas and automotive LPG will be levied tax at the rate of 28 per cent 20 per cent, respectively, while life-saving drugs, PSC application forms, candles and articles of daily use by students such as pencils, pens, writing ink and instrument boxes will be included in the exempted category in VAT.

In order to protect revenue and encourage local taxable sales, the Budget proposes entry tax applicable to additional items such as computer paper, caustic soda, battery other than dry cell and button cell, medical equipment, readymade garments and hosiery goods, weighing machines, automatic teller machines, automotive LPG and Liquefied natural gas. The rates of tax under the Entry Tax Act will be the same as those applicable under the value added tax and the entry tax will be allowed to be set off against VAT.

The rate of tax on jewellery made of gold, silver and platinum will be reduced to one per cent in accordance with the national consensus on VAT on these items. Besides, the manufacturers of centrifuged latex and crumb rubber have been exempted from the liability to pay purchase tax in respect of raw rubber latex used in the production of these items till October 9, 2001.

The Finance Minister said the revenue loss on account of the introduction of VAT was expected to be more than Rs. 500 crore.

The Budget estimates project the total revenue receipts at Rs. 12,699.61 crore and the revenue expenditure at Rs. 15,364.64 crore, leaving a revenue deficit of Rs. 2,665.03 crore. The capital expenditure has been put at Rs. 592.64 crore.

After taking into account accruals from public debt and public account, the overall surplus for the year is projected at Rs. 403.23 crore. This, together with the closing surplus of Rs. 30.10 crore from the current year, the total surplus is put at Rs. 433.33 crore.

On the other hand, an additional expenditure of Rs. 453.21 crore for different development measures, combined with the loss of Rs 500 crore on account of VAT implementation, will result in a deficit of Rs. 519.88 crore. The Finance Minister said this could be bridged through better expenditure management and higher revenue mobilisation.

Meanwhile, the revenue deficit for the current year is expected to be Rs. 1,898.67 crore in the revised estimates, as against the projected revenue deficit of Rs. 2,200.26 crore, representing a fall of 14 per cent.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Safeguard probe on Bisphenol imports

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line