Ahead of polls, Cong-NCP govt gifts populist budget

Written By Unknown on Jumat, 06 Juni 2014 | 22.23

MUMBAI: Eating out in small and mid-sized restaurants is set to get less expensive, your neighbourhood cinema ticket may get cheaper, and prices of cotton clothes, sugar, jaggery, and 'bhel', one of Mumbai's favourite snacks, are also expected to come down.

With an eye on the assembly polls barely four months away, the Congress-NCP government on Thursday unveiled a populist budget aimed clearly at winning back the mass support that the combine so spectacularly lost in the Lok Sabha polls.

For the first time in years, the state has not touched excise and VAT on Indian made foreign liquor (IMFL) and has exempted from tax the interstate trade of raw and unbranded tobacco. This could lead to reduction in prices of tobacco and IMFL.

Deputy CM and finance minister Ajit Pawar, while presenting the budget, announced that the turnover limit of registration under VAT has been increased from Rs 5 lakh to Rs 10 lakh to benefit small-time restaurants and businesses. He said the state had decided to reduce tax on cotton from 5% to 2% and exempt the sugarcane purchase tax, which will impact prices of clothes, sugar and jaggery.

Presenting the state budget, deputy CM Ajit Pawar said the state has exempted from VAT the sale or lease of copyrights of cinematographic films for theatrical exhibition with retrospective effect for a period between 2005 and 2011, something that may have an impact on ticketing. Tax has been exempted on gram and dalia, which is expected to bring down bhel prices.

Another bit of good news for consumers is that retailers now have to pay 1% of turnover or 1.5% of taxable turnover instead of VAT, which may slightly lower prices of goods and commodities.

Pawar said a decision over traders' demand for replacement of the local body tax (LBT) system with other taxes will be taken during the ongoing monsoon session.

The populist measures come even as the state which generates 14% of national income reported a revenue deficit of Rs 4,100 crore in the interim budget which was tabled before the Lok Sabha polls this year.

Hotels in B and C category cities have got luxury tax concessions which were earlier extended to cities like Mumbai, Pune, Navi Mumbai and Pimpri-Chinchwad. The exemption limit for existing rooms has been increased from Rs 725 to Rs 1,000 and reduced for rooms with rates of Rs 1,500 and beyond. This may result in stability or reduction in prices at these hotels.

For hotels, restaurants and other businesses with a revenue turnover of up to Rs 1 crore, the turnover limit for filing an audit report has been increased from Rs 60 lakh to Rs 1 crore.

However, according to sources, infrastructure development may get a little costlier as the government has decided to impose a 5% tax on sales of notified capital goods such as heavy machinery including earth movers etc.

The state has fixed a cap of Rs 10 lakh for stamp duty collection over mortgage of property, pledge and hypothecation. According to Vinod Sampat, an expert in the housing sector, this will help reduce the stamp duty burden for investors and buyers.

Mohan Gurnani, president of the Traders Federation, said the various initiatives would yield benefits for retailers as well as consumers, but the major demand for total replacement of LBT had not been given any priority in the budget.

He said asking retailers to pay 1% of turnover or 1.5% of the taxable turnover instead of VAT was a welcome step as it may benefit consumers by way of a slight reduction in prices.

Pradip Shetty of the Hotels and Restaurants Association of Western India said the increase in turnover limit for filing an audit report would bring major administrative relief for businesses such as restaurants and hotels but would not bring any monetary benefits.

"Reduction of the late fee for filing VAT returns from Rs 5,000 to Rs 2,000 for a delay of up to one month is again a minor relief for smaller establishments and consumers. For me, these steps are more about rationalization than giving any major relief," he said.

http://timesofindia.indiatimes.com/followceleb.cms?alias=Congress,restaurants,Congress-NCP government,Businesses,budget

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