Finance Minister K.M. Mani on Friday proposed a series of additional mobilisation measures worth Rs.1,338.33 crore, mainly by tinkering with tax rates of certain commodities, stamp duties, etc., to present an overall deficit of Rs.526.54 crore in his budget for 2013-14.
The Minister earmarked Rs.1,400 crore for, what he has called, flagship projects and another Rs.67.68 crore as concessions to arrive at his overall deficit figures. He presented figures that show a lower revenue deficit of Rs.2,269.96 crore in the budget estimates when compared to Rs.3,406.44 crore in his revised estimates for 2012-13. Revenue expenditure has been estimated to be Rs.60,327.85 crore as against revenue receipts of Rs.58,057.88 crore. He used a change in the accounting practice to hive off Rs.3,472.06 as grants for creation of capital assets, particularly the portion devolved to local bodies. This has relieved him from the burden of balancing the revenue deficit to suit the 13 Finance Commission recommendations in this regard.
Mr. Mani budgeted for a higher capital expenditure at Rs.8616 crore as against Rs.6,882.21 crore mentioned in his revised estimates.
Tax rates for luxury items
The most significant part of his tax measures include the upward revision of tax rates for luxury items, automobiles, white goods (FMCG, electrical, home appliances, etc) and other consumer goods from the current rate of 13.5 per cent to 14.5 per cent. The hike will help him garner Rs.650 crore as additional revenue. The basic intention, according to the Minister, is to bring the rates on a par with the ones prevailing in Karnataka, Tamil Nadu, Andhra Pradesh, and Puduchery. The Minister contended that the hike in rates will not have any effect on the price level of essential commodities. Neither would it lead to diversion of trade owing to the uniformity of tax rates in the southern region. In order to reduce the impact of prices of these goods, he chose to exempt rice and its varieties such as broken, puffed, parched, and beaten rice from the purview of tax, a concession for which Mr. Mani would not have to shell out much.
The Minister used higher tax rates for cigarettes and similar products, excluding beedies, prevailing in neighbouring States and the health hazard posed by smoking to hike tax rates from 15 per cent to 20 per cent for these products to net Rs.120 crore. He transferred the burden of tax payment to the manufacturers and first sellers at the first point of sale and spared the retailer. He also milked foreign liquor, other than beer and wine, by increasing the current tax rate of 100 per cent to 105 per cent to yield Rs.250 crore. Another Rs.16 crore would come from higher tax on ordinary and bumper draws of paper lotteries up from Rs.25 lakh and Rs.50 lakh to Rs.30 lakh and Rs.60 lakh.
Concessions
The Minister’s concessions included simple changes in procedures for latex traders and Kerala-based cardamom traders, an amnesty scheme for traders who could not utilise the earlier schemes (but subject to certain conditions), tax sops for waterbeds used in geriatric care, footware and agroshade manufacturers.
Since fair value of land has been published, the Finance Minister came forward to rationalize the stamp duty rates by reducing it by 2 per cent from the current rates of 7 per cent for panchayats, 8 per cent for municipalities, and 9 per cent for corporation areas. In order to curb speculation in real estate and artificial boost of land prices, Mr. Mani proposed higher stamp duty on frequent land transactions which would be double the rates levied at the time of the first registration of land if the transaction takes place within three months of the first purchase. He also proposed to revise the fee for various services under the Indian Partnership Act, share market transactions, Kerala Special Marriage Rules, 1958, Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955.
Being the Housing Minister, Mr. Mani showed a special consideration for the Kerala State Housing Board by giving it a 50 per cent concession on the value of the stamp paper for all its land and apartment transactions. The Minister said he expected to net Rs.250 crore from these measures, but would give out an equal amount as concessions.
