In his second budget, MP finance minister Jayant Malaiya tried to do a balancing act between the need to boost revenue and pep up the economy, but fell short of industry expectations.
The finance minister ignored the demand for rationalising the tax structure and scrapping the Form 49-A, which has to be filled by the traders and manufacturers when they deal with their counterparts in other states.
The finance minister expanded the list of items in this category, much to the chagrin of the trade bodies.
“The state budget has been average from industry viewpoint. The increase in stamp duty on property registration is a setback, and we will have to wait for details to see whether it will include mortgages as well,” CII state council chairman Girish Mangla said.
The CII has welcomed the move to streamline the input tax rebate (ITR) process.
In the tax rejig, the hardest hit was the plastics sector with a hike in the value added tax (VAT) from 5% to 14%.
To promote green initiatives, the budget has reduced VAT on battery operated rickshaws, bags made from biodegradable material and also on organic pesticides.
Industry has welcomed Rs 300-crore allocation for water supply project in Pithampur. The Narmada water supply project is one of the early-bird projects being implemented under Delhi-Mumbai Industrial Corridor (DMIC) project.
“The dual entry tax structure was not removed, and increase in VAT on plastic products will have an adverse impact on that sector,” said Pithampur industry association president Gautam Kothari.
The finance minister talked about information technology (IT) parks in four cities -- Indore, Bhopal, Gwalior and Jabalpur -- but did not make separate fund allocation.
The existing IT Park in Indore will be expanded and IT Parks in Bhopal and Gwalior are nearing completion. The one in Jabalpur is yet to take shape.
Economist Jyantilal Bhandari said the budget had nothing much to offer for trade and industry.
“There is nothing in the budget that will promote ‘Make in MP’ initiative of the state government. No measures have been taken to encourage start-ups, and no major incentives have been announced for existing enterprises.”
The trade and industry is now eagerly awaiting the fine print to ascertain the extent of impact on different sectors.
VAT on plastic products, VAT on cycles costing Rs 10,000 and more
Stamp duty on property registration hiked
VAT on cigarette, mirror and glass, gas geyser, electronics items
VAT on soya milk, soya meal, organic pesticide, agriculture equipment, heavy-duty vehicles, dialysis machines
VAT exemption for milk extraction machine and entertainment tax exemption for new multiplexes.
Rs 2,462 crore for incentives for new investments and infrastructure development in industrial hubs
Rs 300 crore for water supply project in Pithampur industrial area
Rs 39 crore to promote fish breeding enterprise