Assam chief minister Tarun Gogoi has presented a Rs 1,385.77 crore deficit budget for the financial year 2014-15.
“The aggregate expenditure for the year is estimated at Rs 388113.10 crore. Thus, estimated transactions during the year will result in an estimated deficit of Rs 1385.77 crore. This, together with the opening deficit of Rs 972.14 crore, the financial year 2014-15 is expected to end with an estimated closing deficit of Rs 2357.91 crore,” said Gogoi, who also holds the additional portfolio of finance department, while presenting the budget.
The budget proposed to exempt chimney, parts of kerosene lamp from VAT. In addition, VAT on parts of writing instrument, accessories of bi-cycle, tri-cycle, cycle rickshaws, sanitary napkins, fabricated goods of iron and steel were reduced from 14.5 per cent to 5 per cent.
“To encourage” Green Technology, the budget also exempted renewable energy devices and spare parts from VAT. Also to promote micro-small-medium enterprises (MSME), the budget proposed to allow concessional rate of entry tax on all raw materials used by local MSME sector if such materials were not available locally. Gogoi also instructed industries department to draw up a scheme for this purpose.
The budget also tried to rationalise professional tax rates. For the tea industry, the budget proposed to extend the deduction allowed at Rs 6 per kg of tea exported through Inland Container Depot (ICD)for another year. On the other hand, the budget raised VAT on motor parts and accessories from 5 per cent to 14.5 per cent. VAT on natural gas was raised from 12% to 14.5% and on smoking tobacco it was raised from 25% to 30%.
“Some of the measures like steep increase in rate of VAT on Motor parts and accessories etc may prove counterproductive and lead to diversion of trade. We welcome rationalisation of tax rates etc, and exempting renewal energy devices and spare parts for VAT,” said RS Joshi, chairman of Federation of Industry and Commerce of North Eastern Region (FINER).
The Confederation of Indian Industry (CII) found the budget “more practical and grounded”. “This is probably the first time the state has announced a convergence of efforts by including three to four major department of the state. This can be the building block for other such initiatives in the future,” said Abhijit Barooah, co-chairman of CII’s North-East Council.
However, according to CII the proposed increase in VAT on natural gas would be “detrimental” for the industries in the region. “The proposed increase in the VAT rate on natural gas from 12% to 14.5% will be detrimental for the industries in the region.
This should be considered as an industrial input and taxed at not more than 5 per cent. Major consumers including the tea, power and Assam Petrochemical Ltd. will be affected by this increase. This gains greater significance in view of the outlook of the union government on enhancing the gas connectivity across the country,” said Barun Barpujari, chairman of CII’s Assam State Council and executive director of Digboi Refinery.