The State government has exempted, deferred or reimbursed taxes of several companies and foregone purchase tax on sugarcane bought by sugar industries, which adds up to over ₹1,200 crore in 2015–16 and during the first three quarters of 2016–17.
The government’s offer to waive purchase tax of sugar mills cost the exchequer ₹28.52 crore for 2015–16 and ₹ 45.50 crore for the first three quarters of 2016–17. A total of 48 sugar factories benefited under the scheme, according to the medium-term fiscal plan (MTFP) of the government for the 2017–21.
The government waived purchase tax of sugar mills, subject to them clearing arrears of farmers which was due for the last three years (2013–16). Between 2013–16, sugar mills had defaulted on payment of fair and remunerative price (FRP) for purchase of sugarcane from farmers. Since then, the arrears exceed ₹2,300 crore. The exemption was given to those sugar mills that cleared their sugarcane dues. The government levies ₹45 per tonne of sugarcane as purchase tax on sugar recovery of 10.5% and ₹35 per tonne for less than 10.5% recovery of sugar.
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Big waiver
The government has given exemption/deferment/reimbursement of sales tax, value-added tax, Central sales tax, and entry tax to 92 companies totalling ₹576.01 crore during 2015–16 and to 100 companies totalling ₹635.61 crore during the first three quarters of 2016–17.
The MTFP revealed that entry-tax exemption was given to 34 firms each during 2015–16 and 2016–17 and Karnataka sales tax exemption was given to 28 firms during 2016–17.
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A Fiscal Management Review Committee, headed by the Chief Secretary, has recommended rationalisation of existing government schemes, totalling 2,132 in 2016–17 to ensure focused approach on the outcomes and avoid thin spread of resources.
It recommended removal of old schemes which have become outdated and merge with similar objectives.