Highlights of Maharashtra Budget 2010-11 and text of Budget Speech

PART I

+     Economic review of Maharashtra

• The annual inflation rate based on All-India Wholesale Price Index for February 2010 was 9.89 per cent.
• The average All India Index of Industrial Production, showed a growth of 2.35 per cent as compared to previous year.
• For the year 2010-11, Revenue receipts have been estimated at Rs.97043.90 crore and Revenue expenditure at Rs. 104698.41 crore and hence revenue deficit will be Rs. 7654.50 crore.

+     Finance

• State will get Rs. 91,709 crore. Out of which Rs. 75,406 crore State share in Union taxes and Rs. 16,302 crores as grant-in-aid during the year 2010-11 to 2014-15.

+     Planning

• The size of annual plan of 2010-11 is fixed at Rs. 33,934 crore.
• An outlay of Rs. 3,461 crore has been provided for Special Component Plan for scheduled castes.
• An outlay of Rs. 3,020 crore has been provided for Tribal Sub-Plan.
• An outlay of Rs. 7,366 crore has been provided for Irrigation Sector.
• An outlay of Rs. 221 crore has been from development of Minorities.
• Special provision of Rs. 650 crore to remove physical backlog in five districts namely Amravati, Akola, Washim, Buldhana and Ratnagiri.
• Size of District Plan for 2010-11 has been increased to Rs. 3,816 crore.
• An outlay of Rs. 1,398 crore has been provided for Employment Gurantee Scheme.
• An outlay of Rs. 500 crore has been proivded to increase Human Development Index in 172 taluka.
• Provision of Rs. 75 crore for Instrastructure Development in small and large village panchayats.
• An outlay of Rs. 145 crore for Integrated Development of cities.
• Massive provision for development of Pilgrimage places and tourism in the State.

+  Agriculture

• Massive provision under Rashtriya Krishi Vikas Yojana in Konkan Division.
• Loan upto Rs. 50,000 will be made available at zero rate of interest under Dr. Punjabrao Deshmukh crop incentive scheme.
• Debt waiver and Debt Relief Scheme is extended for six months.
• Financial assistance of Rs. 246 crore to affected persons due to Cyclone and unseasonal in the State.

+   Rural Development Department

• An outlay of Rs. 200 crore will be made available for Eco-sustainable Village Scheme.
• An outlay of Rs. 1,065 crore for Indira Awas Yojana.
• An outlay of Rs. 253 crore for Backward Region Grants Fund.

+   Public Health

• A provision of Rs. 250 crore for first phase of new Rajiv Gandhi Jeevandai Yojana.
• New Medical college proposed for Raigad and Nandurbar Districts.

+  Education and Sports

• Computer laboratories will be established in 2500 secondary schools to impart com­puter education to the students in the state.
• Massive Grant-in-aid for educational institutes.
• Sports museum by the name of Sachin Tendulkar in Mumbai City is proposed.

+    Food and Civil Supply.

• To control rising prices of essential commodities and to provide relief to the common people, a provision of Rs. 1,550 crore has been estimated to make available these commodities at fixed rate through Ration Shops.

+   Water Supply

• A provision of Rs. 34 crore for Maharashtra Sujal and Nirmal Abhiyan.

+  General Administration

• Establishment of performing Art University will be proposed at Pune.
• Intension to construct various monuments.

+    Law and Judiciary

• An outlay of Rs. 116 crore for the infrastructure of judiciary.

+    Social Justice

• Intention to open100 Government hostels for Vimukta-Jati and Nomadic Tribes.
• Under Dalit Vasti Improvement Scheme the amount of grant is doubled.
• 93,500 houses to be constructed for Scheduled Castes beneficiaries at the cost of Rs. 905 crore.

+   Women & Child Development

• Additonal State expenditure of Rs.67 crore under the Supplementary Nutrition Scheme for adolescent girls (SABALA).
• A provision of Rs.2,01 6 crore for Integrated Child Development Scheme.

+  Minorities Development

• Provision o1 f Rs. 35 crores for Pre-Matriculation Scholarships to minority students

+  Industries

• Under the Package Scheme of Incentives, grant of Rs. 400 crore has been pro­posed.
• Foreign Direct Investment of Rs.83,723 crore is expected in State.

+   Energy

• New Thermal Power Projects are proposed Dondaicha, District-Dhule and Dhopave, District Ratnagiri.
• Massive provision for Gaothan Feeder Separation and Single Phasing Scheme.

+   Labour

• Revision of minimum wages for various scheduled workers (including Agricultural workers).
• An outlay of Rs. 11 crore for Rashtriya Swasthya Bima Yojana.

+ Water Resources

• Massive provision for Irrigation Project in Vidarbha.
• Small Hydel Projects will be completed with the help of privatisation. A time-bound programme of Rs.300 crore has been implemented to develop Khar Land.

+   Road Development

• Government intends to complete all the works of four laning of Mumbai – Goa Na­tional Highway by the year 2014.
• An outlay of Rs. 600 crore for Central Road Fund Scheme

+  Urban Development

• Around 75,000 dwelling units are proposed to be constructed under Jawaharlal Nehru National Urban Renewal Mission.
• A provision of Rs. 1,840 crore is proposed for Urban Infrastructure Developement Scheme for Small and Medium Towns under Jawaharlal Nehru National Urban Re­newal Mission.
• An outlay of Rs. 150 crore is proposed for the Maharashtra Suvarna Jayanti Nagrotthan Maha-abhiyan.
• To facilitate traffic in Pune and Pimpri-Chinchwad cities a Government will take up survey to make available facility to Metro Railway.

+ Home

• 40 well equipped Bomb Detection and Disposal Squads have been raised in the State.
• Establishment of the new Alfa Hawks Academy – State Training Institute for Anti­naxal operations at Nagpur.
• To strengthen coastal security the Government intends to form a Marine Police Wing.

PART II

• Sales Tax Target for 2009-20 10 is achieved.
• Maharashtra is the first State to provide e-services to dealers.
• Facility of e-Registration and e-Payment has been made functional.
• e-Services for Luxury Tax and Profession Tax Payers.
• Extention of tax exemption to Rice, Wheat, pulses, their flours, chillies, gur, tarmind, coconut, corainder, fenugreek, turmeric, parsely (suva), papad, wet dates, solapuri chadars and towels.
• Concessional VAT Rate for raisins, currants and tea is continued.
• Tax concession to Hairpins, Blood Transfusion apparatus, vehicles operated on battery or solar energy.
• Solar Lanterns, Camphor, Dhoop, Kath (catechu), H.D.P.E Fabric Vermi Compost bed, Cotton seed oil cake – Tax free.
• Additions to List of Farsan items.
• Relief in Luxury Tax to small Hotels and Lodges. No Tax on rent upto Rs. 750.
• Composition scheme for Builders and Developers – 1% VAT.
• Increase in Turnover limit for VAT Audit from Rs. 40 lakh to Rs. 60 lakh.
• Increase in time limit for payment of Tax for small dealers.
• Establishment of Tax Academy in Raigad District.
• One time motor vehicle tax on Auto Rickshaws and black-yellow meter taxis.

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BUDGET SPEECH

Hon’ble Speaker

I present the Part II of the Budget before the house.

Review of Revenue Receipts.

1. This Financial Year began on the backdrop of economic recession. Lower tax receipts were expected due to global recession. Even the Central Government had reduced its target of tax receipts. Considering this situation, the tax receipt target for 2009-20 10 of the Sales Tax Department was fixed at Rs. 3 1,346/- Crore. I am happy to inform the house that the sales tax target has been achieved. The signs of global economic recession receding are visible and I hope that in the next financial year, the revenue receipts would get a boost.

Computerisation of the Sales Tax Department and providing latest modern services to the dealers.

2. Hon’ble members would remember that in the last year’s budget, it was promised that the facility of e-Registration and e-Payment would be made available to the dealers. I am happy to inform the Hon’ble members that both these facilities have been made functional. Besides these, in the last financial year e-Refund and the Audit Report Form 704 are also being accepted in the electronic format. Maharashtra has become the first State in the country to provide through Internet the electronic services like acceptance of registration application , filing of return and payment of taxes, application of refund, acceptance of audit report and application for declarations under Central Sales Tax Act. Due to this, it has become easier for the taxpayers to do the sales tax related work. This automation will facilitate implementation of Goods and Services Tax in future.

Establishment of Tax Academy

3. Indirect tax is the principal source of State revenue. GST is proposed to be implemented in near future. For imparting training to the officers and employees of the Sales Tax Department and for carrying out research & analysis of tax collection, a Tax Academy will be established in Raigad District.

Amend­ments to VAT Act

4. Some amendments to the VAT Act have become necessary. Some of these changes are technical in nature and some relate to the day to day functioning of the Sales Tax Department. Amendments to this effect will be placed before the house. These changes will include allowing transaction wise assessment, provision for grant of part refunds, to make intimation and some interest orders non appealable, amendment to Section 35 , to provide quarterly return for newly registered dealers and amendment to section 29.

E-Services for Luxury Tax and Profession Tax.

5. VAT returns are already being accepted electronically. In the coming Financial Year, this facility of filing electronic returns will also be provided under the Profession Tax Act and Luxury Tax Act. After the implementation of VAT, Sales Tax Department is re-organized. Profession Tax Branch also needs to be re-organized on the same lines. Accordingly, necessary amendment to this effect will be carried out.

Stringent provision for non issuance of bills to customers.

6. Customer should get a bill for every purchase. Some dealers do not issue sales bills and thereby evade tax on such sales. In order to protect the interest of the consumers, penalty provision for non-issuance of bills is being made more stringent.

Measures for expediting refunds.

7.After the implementation of VAT, the number of dealers claiming VAT refunds has increased substantially. The refund claims of dealers are required to be confirmed by cross-check of taxes paid on their purchases. At present, this is being done by personal visit. This causes delay in granting of refunds. To grant speedy refunds to the dealers, henceforth, it would be mandatory to record the TIN of the purchaser on the Tax Invoice. This would facilitate cross-check of the set-off and would help in disbursing the refunds speedily.

Composition scheme for Builders and Developers

8. As per the judgement delivered by the Hon’ble Supreme Court a few years ago, VAT becomes leviable on the sale of construction material used in the construction of flats. Many consumers and consumer organizations are demanding simplification in computation of this tax. Having considered all the aspects of this demand, I hereby announce a simple composition scheme for the builders and developers. Under this scheme, one percent VAT would be payable on the contract price of flats mentioned in the agreement of sale. However, such builders and developers will not be eligible for set off under the VAT Act. This scheme shall come into force for the agreements registered after 1^st April 2010.

Relief in Luxury Tax to small Hotels and lodges.

9. Presently, as per the provisions of the Luxury Tax Act, the hotels charging rent upto Rs. 200 per day per accommodation are not liable to pay Luxury Tax. For rent from Rs. 200 to Rs. 1200, Luxury tax at the rate of 4% and for rent above Rs. 1200, Luxury Tax at the rate of 10% is attracted. I am hereby enhancing the limit for liability of tax for small hotels and lodges. Now, rent upto Rs. 750 per day per accommodation is being exempted. No change is proposed in respect of tax on hotels, charging rent more than Rs. 750 per day.

Increase in turnover limit for VAT audit.

10. The turnover limit for audit under section 61 of VAT Act will be increased from Rs. 40 lakhs to Rs. 60 lakhs. It will also be mandatory for all the dealers covered by package scheme of incentives, to file the audit report.

Increase in time limit for payment of Tax by small dealers.

11. Out of the total dealers in the State, the number of small dealers filing six monthly returns is quite large. These dealers are required to pay the tax within 21 days. This period is now being increased to 30 days.

Tax Relief.

12. All the States in the country have more or less the same VAT system. There is hardly any scope for tax concessions under VAT. Still, for the goods of day to day use of common man, I have decided to exempt the tax or to reduce the tax burden.

Extension of Tax relief period for food grains and some other essential items, raisins, currants and tea.

13. Rice, wheat, pulses, and flours thereof, chillies, turmeric, gur, tamarind, coconut, coriander seeds, fenugreek, parsley (suva), papad, wet dates, Solapuri Chadars and towels are presently exempt from tax upto 31^st March 2010. Empowered Committee has recommended the tax rate of 4% on these goods, yet to keep the prices of these essential items under control, I declare that the tax exemption on these will continue till 31^st March 2011 or the implementation of Goods and Services Tax Act, whichever is earlier.

Empowered Committee has also recommended VAT @ 12.5% on raisins, currants and tea. However, I propose to continue the concessional VAT rate of 5% on these items up to 31^st March 2011 or the implementation of Goods and Services Tax Act whichever is earlier. Notifications in this respect will be issued immediately.

Extension of tax relief period for Aviation Turbine Fuel.

14. For the period, up to 31^st March 2010, the rate of tax on Aviation Turbine Fuel sold at small airports except Mumbai and Pune was reduced to 4%, to encourage air traffic and increase their connectivity. I propose to continue this tax concession upto 31^st March 2011 or till the implementation of Goods and Services Tax Act, whichever is earlier.

Tax Relief to blood transfusion apparatus.

15. Blood Transfusion apparatus is required to give blood to patients. In some chronic diseases like thalassaemia or sickle-cell, patients require frequent blood transfusion. To reduce the economic burden of treatment of such patients, I propose to reduce the rate of tax on this apparatus from 12.5% to 5%.

Solar lanterns tax free

16. To check the increase in demand of electricity in the State and to prevent environmental degradation, it is necessary to make more and more use of non-conventional energy sources. Last year, various equipments working on solar energy were exempted from VAT. I hereby expand this list to include solar lanterns.

Tax concession to Vehicles operated on battery or solar energy.

17. Use of vehicles that work on solar or battery power, which do not pollute the air and reduce fuel consumption need to be encouraged. In order to reduce their prices I am reducing the tax on such vehicles from 12.5% to 5%.

Camphor, Dhoop, Loban and Kath tax free

18. Camphor is mainly used for religious and medicinal purpose. Similarly Dhoop and lobhan is normally used during religious ceremonies. Kath is used in ‘pan’. As these commodities are used by the common man, I exempt them from levy of VAT.

Reduction in tax rate of Hairpin.

19. Hairpin is widely used by women. Last year, rate of tax on imitation jewellery was reduced from 4% to 1%. Representations were received that the rate of tax on hairpins be reduced to the level of imitation jewellery. Considering this demand, I have decided to reduce the rate of tax on hairpins from 4% to 1%.

Addition to Farsan list

20. There has been a consistent demand to reduce the high tax rate on Sabudana Chivada, Chana-chur and Khandvi. Considering this demand, I have decided to include these items in the list of Farsan .

HDPE Fabric Vermi compost bed and cotton seed oil  Cake – tax-free

21. To encourage entrepreneurs who bring innovations to the agriculture sector, vermi compost beds made from HDPE fabrics are being exempted from tax.

Cotton seed oil cake is used largely as cattle feed. To reduce the economic burden on farmers to a certain extent, I have decided to exempt Cotton seed oil cake from tax.

Relief on laundry Soaps manufactured by KVIC Units.

22. In order to encourage employment opportunities in the rural areas, tax on sales of hand made laundry soaps manufactured by KVIC units will be exempt from tax.

Amendment to Bombay Motor Vehicle Tax Act, (1958)

23. Presently motor vehicle Tax is levied every year on Auto Rickshaws and black-yellow meter taxis. These vehicle owners are therefore required to visit the office frequently. To enable the Government to collect tax efficiently, I propose to levy one time tax on these vehicles.
24. Jai Hind ! Jai Maharashtra !