By our correspondent, Gandhinagar, 20 February 2013

Cigarette will become costlier in Gujarat, while row material (bhusu) for incense stick, pencil, sharpener, scale, eraser etc things used in schools, micro irrigation tools will become cheaper.

Finance Minister Nitin Patel today presented the annual budget of Gujarat for year 2013-14.

He proposed total waiver of tax on micro irrigation products, raw material for incense sticks, pencil, sharpener, scale, eraser, mathematics instruments used for education in schools, Paati palangs.

Tax on cigarette has been increased from 25% to 30%. Selling of second hand vehicles, carbon credit usage are covered under tax structure.

Those having turnover in a range of Rs 50 lakh to 75 lakh are availed benefit of lump sum VAT option.

Relevant part of Finance Minister’s speech

Value Added Tax

Lump sum Tax The option to pay lump sum tax is available to the dealers having total turnover up to ` 50 lacs subject to certain conditions under the provision of section 14 of the Gujarat Value Added Tax Act, 2003. In order to make available the benefits of this provision of lump sum tax to more dealers of the State, I propose to increase the total turnover limit of ` 50 lacs to ` 75 lacs under section 14. This provision would make available the option to pay lump sum tax to approximately additional
23000 dealers of the State.

The dealer can pay lump sum tax quarterly at the rate of 0.5 percent on the taxable turnover instead of calculating the tax on each sale under the provision. Such dealer is required to furnish simplified quarterly return. Thus, the benefit of this provision would be available to the dealers having total turnover up to ` 75 lacs.

Micro irrigation system equipments

The farmers of the State have become more aware due to the programs like Krushi Mahotsav and are using the advanced technology of micro irrigation system in agriculture. The use of this system saves water and electricity and increases productivity.

Thus, in order to encourage the use of micro irrigation system equipments in agriculture, I propose to fully exempt micro irrigation system equipments from current rate of tax 5%
including additional tax.

Educational items for study of the students

The Enrollment Campaign and Girls Education Program implemented by the State Government have improved the literacy rate in the State. Pencils of all types, foot rules, slide rules, mathematical instruments and its box, school color box, rubber erasers and pencil sharpeners are necessary for the students for 2 their study. In order to give relief to the students of the State, I propose to fully exempt these items from current rate of tax 5% including additional tax.

Newar made of plastic

Newar made of plastic is used by the poor and middle class people in rural and urban areas. In order to give relief to these people, I propose to fully exempt newar made of plastic from current rate of tax 5% including additional tax.

Agarbatti dust At present, agarbatti is tax free in the State. But large manufacturers supply agarbatti dust to the small cottage industries to manufacture agarbatti. At present, agarbatti dust is taxable at the residuary rate of 15%. Now, I propose to fully exempt agarbatti dust also.

Carbon credit

There has been more awareness about the adverse impact of climate change. Gujarat has taken initiative in this direction and planned various programs to protect the environment. Carbon credit becomes available to many units for using renewable energy resources. Such units can sell their excess carbon credit to other units. As there is no specific entry for carbon credit under the VAT Act, the sales transaction of carbon credit is liable to be taxed under residuary entry at the rate of 15% including additional tax. In order to encourage the use of carbon credit, I propose to include the carbon credit in entry 41 of Schedule II as an intangible or incorporeal goods and make it taxable at the rate of 5% including additional tax.

Cigarette Smoking

Cigarette made from tobacco is injurious to health. In the interest of the society, it is necessary to curb the
consumption and usage of cigarettes. With this objective therefore, I propose to increase the rate of tax on cigarette
made from tobacco from the present rate of tax 25% including additional tax to 30% including additional tax. 3

Second hand (used) two wheelers and second hand (used) commercial vehicles

The used vehicles are sold in huge numbers in the State. At present, there is a provision to tax the sale of used or second hand motor car at the rate of 1% (subject to maximum ` 2000). By adding similar provision, I propose to make taxable the sale of second hand (used) two wheelers at the rate of 1% (subject to maximum ` 500) and sale of second hand (used) medium and heavy duty commercial vehicles at the rate of 1% (subject to maximum ` 5000) made by a registered dealer.

Lump sum Entertainment tax for video houses

Owners of video houses are provided an option for lump sum payment of entertainment tax under the provisions of the Gujarat Entertainment Tax Act, 1977. The provision of relief was made keeping in view the financial capacity of the poor and labourer classes who come to video houses for entertainment.

But, it has come to the notice that some large theatres, multiplex cinema houses etc. are misusing the option of lump sum, though are liable to pay entertainment tax on the price of the ticket. In order that the relief relating to lump sum reaches to the needy classes only, I propose that the option of lump sum tax would be available to only those video houses which fulfill the following conditions:

(1) The rate of entry into the place of entertainment shall not be more than ` 30/- per person.
(2) Entertainment (showing of films) can be provided using any kind of technology.
(3) The maximum number of seats in the entertainment place shall not be more than 125.
(4) There shall not be more than one screen in the premises.

Profession Tax The salary and wage earners having monthly salaries or wages less than ` 3000 are exempted from payment of profession tax under the provisions of the Gujarat State Tax on Professions, Trades, Callings and Employments Act, 1976. Whereas the salary and wage earners whose monthly salaries and wages are ` 3000 or more but less than ` 6000 are liable to pay profession tax at the rate of ` 20 per month. In order to give relief to the neo middle class, I propose to fully exempt the salary and wage earners having salaries or wages `3000 or more but less than ` 6000 per month. There is no proposal for change in any other rates.

Electricity Duty on self generation

Self generation of electricity for industrial purpose is exempt from payment of electricity duty for an initial period of five years. The consumers who are generating and using the electricity are paying electricity duty not on the price of the consumption of electricity but at the rate per unit. The rate of electricity duty is 40 paise per unit for them which was fixed in the year 1999. Against this, the industrial units which are buying electricity from the electricity distribution companies have to pay electricity duty at the rate of 15% on H.T. and 10% on L.T. In order to minimize the gap between these two types of consumers, I propose to increase the present rate of electricity duty by 15 paise per unit and make it 55 paise per unit for H.T. and L.T. consumers. This additional increase would be borne by limited number of industrial units.

Conclusion The final position of Budget estimates for the year 2013-14 will be as under: