J&K govt shares peace dividend, announces tax waivers
Buoyed by 38% increase in revenue collection and his sights on the 3.5% targeted fiscal deficit - which now stands at 5.3% - Jammu and Kashmir finance minister AR Rather announced a series of tax waivers, most notably on LPG, but brought more services in the tax net, in the state budget announced on Monday.
The service sector contributes about 50% to the Gross State Domestic Product (GSDP). The finance minister, presenting his fourth budget of the current National Conference-Congress government, acknowledged the "peace dividends" thanks to a largely violence-free 2011, which resulted in increase in tax revenue.
The government by announcing a series of tax waivers in direct relief to common people also tried to send a message that with continuation of peace, common people will be benefited more.
Rather not only announced withdrawal of VAT on LPG but also offered similar concessions on household commodities (maida, atta and rice). He also extended VAT exemption on stationery items, ranging from 13.5% to 5%.
In announcing these measures, the government held the view that though stationery goods don't contribute much to the GSDP, a large section of society, especially youth, is involved in the trade.
"These items are used by school children. Youngsters constitute our future. I feel that we owe it to them to contribute to the building of the future," said Rather.
The finance minister's attempted to share peace dividend with people and announced a series of tax measures for tourism sector, constituting the mainstay of Kashmir's economy and had suffered on account of the unrest.
The government announced capital subsidy on creation of fixed assets up to 30%, capital subsidy up to Rs 1 crore for prestigious units subject to nvestment of Rs 25-crore or more and reimbursement on preparing Detailed Project Report. To tap more tax sources, especially in service sectors, which is expected to grow more, services provided for construction activity, TV and radio production, architects and CA will be taxed.
In addition to it, not only cigarette and liquor will cost more but tax on edible oil has been increased from Rs 140 per quintal to Rs 150 and toll tax of Rs 250 per quintal of mutton imported from outside will be levied.