Three states presented their budgets on Thursday, proposing to make several consumer goods costlier but keeping local taxes on food items largely unchanged.
The budgets of Madhya Pradesh, Bihar and Gujarat appear to be in sync with broader expectations tied to the Union Budget 2010-11 that Finance Minister Pranab Mukherjee unveils on Friday.
Colour television sets, electronic toys and entertainment equipment and cosmetics, among other things, will be costlier from the next financial year, as the state government has raised entry tax on these items from 1 per cent to 2 per cent.
Finance Minister Raghavji said that in the wake of price rise, foodgrains, pulses, salt, sugar and flour would remain exempt from value-added tax (VAT).
The budget proposals offer benefits to the ruling formation’s [Janata Dal (U)-Bharatiya Janata Party] core constituency, including farmers, weavers, bidi workers, teachers and traders.
A fresh 15 per cent entertainment tax on service providers, will make direct-to-home (DTH) television costlier.
Industry will gain from VAT exemption on new units, entry tax withdrawal on raw material for industrial units and entry tax reimbursement for new and existing units.
For farmers, Finance Minister Sushil Kumar Modi announced a 3 percentage point interest subsidy on short-term loans taken through kisan credit cards. Against 7 per cent interest, farmers will have to pay 4 per cent. Modi said there had been a 41 per cent increase in the outlay for agriculture.
Tobacco and its products will become costlier as the Gujarat government has proposed to increase VAT from the present 15 per cent (inclusive of additional tax) to 20 per cent.
The Gujarat budget has reduced VAT credit to 2 per cent on the purchase of goods made within the state and used in inter-state sales.
State Finance Minister Vajubhai Vala said the move would compensate the state for the loss it suffered after reduction in central sales tax rate.