The West Bengal Finance Bill proposes a 25 per cent increase in tax earnings for 2012-13. The rise banks primarily on one percentage point increase in VAT on luxury items and an advalorem duty on country-made liquor.
The State government is expecting tax earnings to rise to Rs 31,222 crore next fiscal, as against a revised target of Rs 24,934 crore for 2011-12.
Vat increase
Tabling the Finance Bill, the State Finance Minister, Dr Amit Mitra, proposed an increase in VAT – from 13.5 per cent to 14.5 per cent – on luxury goods that include cars priced above Rs 10 lakh, mobile phones above Rs 20,000, television sets above Rs 25,000, watches above Rs 15,000 and air conditioners above 1 tonne. Also proposed was the levy of advalorem duty on the MRP (maximum retail price) of country-made liquor.
Incidentally, the revised estimates for the current fiscal show a mere 18 per cent growth in own-tax revenue as against the originally proposed 30 per cent. The Finance Minister, however, did not give the actual collections so far during the year.
Also proposed was the levy of tax on entry of goods into local areas of the State under a ‘Compensatory Entry Tax Fund.' According to the Chief Minister, Ms Mamata Banerjee, the new tax would not lead to an increase in price of goods or any burden on the common man.
Changes in Tax
While empty LPG cylinders were exempt from VAT, rates on wooden boxes, paneer and kite stickers have been brought down to 4 per cent from the existing 13.5 per cent.
The Finance Minister, once again focussed on bringing a larger number of small companies and firms under tax ambit and compliance. Compliance norms for smaller firms and restaurants with a turnover of less than Rs 3 crore was relaxed which include amnesty for those complying with norms.
Also exempted was an education cess by tea estates and rural employment cess.
Focus on Social Sector
Keeping in mind the upcoming Panchayat elections (scheduled in 2013) in the State, the Budget had a predominant focus on rural Bengal. Proposals were made to set up 62 Kishan Mandis (agricultural) markets during the fiscal at an expected cost of Rs 199 crore. Proposals for setting up a cold storage chain across the state.
Improving the health delivery mechanism in the various districts has been another focus area of the Budget.
Another prominent feature of the budget was to increase the number of job-days created under the MGNREGS (Mahatama Gandhi National Rural Employment Guarantee Scheme) to 200 man-days across the State. Currently, West Bengal has one of the lowest numbers of man-days generated through the MGNREGS.
According to the Dr Mitra, planned outlay during 2012-13 is expected to go up by nearly 12 per cent to nearly Rs 24,000 crore.