In its recent Budget Maharashtra State Govt. And its Finance Minister offered a mixed bag for the industry, trade and individuals subjected to professional tax. Keeping in mind not the economic slowdown but the forthcoming State Assembly polls in October, the Finance Minister, Mr Dilip Walse Patil has announced exemption of salary upto Rs 5000 from professional tax and also introduced an amnesty scheme for professional taxpayers. This scheme will come into force from July this year.
For small dealers the Minister announced a simplified VAT refund scheme for refund below Rs five lakh. It is hoped that the computerisation of the VAT Department may streamline the procedures for refund which will help all industries.
However, what may pain the industry is the hike in the VAT rate for goodies like high-end cars, liquor, cigarettes and electronic goods. The VAT rate on goods like mobile phones, cordless phones, video phones, video and digital cameras has been hiked from 4% to 12.5%.
Liquor has seemingly borne the brunt of the Minister as the the sales tax rate has been hiked from 20% to 25% on IMFL and imported both. The State Excise duty on IMFL is up from Rs 160 per litre to Rs 180 per litre. Tobacco is another product which could not have expected any favour from the Minister and the VAT in its case except bidi, has been hiked from 12 % to 20%.
However some of the mass goods like energy saving and medical equipment will now attract 4% tax in place of 12.5%. To promote non-conventional energy usage, the Minister has exempted from tax solar energy goodies like solar panels, solar heaters and solar cookers. Duty on CFL has been reduced from 12.5% to 4%.
For the services sector, the Minister has reduced the tax rate from 8% to 5% on restaurants and hotels upto three-star ratings. To give incentive to intimation jewellery industry, the VAT rate has been reduced from 4% to 1%.
To generate some revenue the Minister has doubled the VAT rate on contract for advertisement, rights of telecasting films and copy rights. At present, the stamp duty is levied at the rate of Rs. 2.50 per Rs 100 value of the contracts.
On the motor vehicle tax front, although the Minister did not touch the 7% rate for four-wheelers upto Rs 10 lakh but the rate has been hiked to 8% for vehicles upto Rs 8 lakhs and 9% for above Rs 20 lakh.
Experts have meanwhile criticised the Budget for no proposal on Octroi.