The industrial units registered within the State have been enjoying the benefits of exemption from payment of GST under the specified conditions and for the specified period as per the package of incentives applicable to them. With the transition from GST to VAT regime, such units were allowed the benefit of remission of VAT for the remaining period of their entitlement under the package of incentives applicable to them. We are hoping to switch over to another reformed system of Goods and Services Tax (GST) at the national level in near future. In the meanwhile, I had announced extension of these benefits in favour of the eligible industrial units for a period of one year which is about to end on the 31st March 2011. I now propose to extend this benefit for a further period of one year or adoption of GST Act by the State, whichever happens to be earlier. As per a rough assessment, the cost of this concession works out to around five hundred crore of rupees annually.
Raw Material Consumption
The Industry has represented that under the present arrangement the verification of consumption of raw materials consumed by the registered SSI units is being done by the concerned authorities on quarterly basis for purpose of issuance of Toll exemption forms. This system creates avoidable difficulties in functioning of these industrial units. On the demand of the Industry, I propose to relax this requirement. Henceforth such verification shall be done on yearly basis.
Most of the other States of the country, have levied taxes on room rent charged by the hotels, lodges and guest houses. For them, it is a substantial source of revenue. Additionally, Luxury Tax is also levied in many States.
In our State, the tourism industry suffered in the nineties because of the disturbed law and order conditions. As the then Finance Minister, I had announced several concessions for the tourism industry over a decade back. These concessions have been continuing since then, more or less in the same form. Total GST exemption on the rental income of hotels, guest houses and lodges is one of them.
In order to sustain the tourism industry, I had announced to continue exemption from payment of GST on such rental income for a further period of one year which is going to end on the 31st March 2011. The current year has witnessed improvement in the number of tourist arrivals into the State, including a record number of pilgrims to Shri Mata Vaishno Devi shrine and Shri Amar Nath Ji cave. I would wait and wish to see the tourism industry well stabilized in near future. As a measure of my continued support to this industry, I propose to continue this concession for yet another year commencing from the 1st April 2011.
Hawan Samagri is a commodity which presently attracts VAT at the rate of 13.5%. Very forceful representations have been made to me that this item may be kept in the zero rated schedule. I have considered these representations sympathetically. Respecting the religious sentiments of our brothers and sisters, particularly the yatris coming from outside the State, I hereby announce grant of total exemption on the sale of Havan Samagri from the levy of VAT.
On the demand of the representatives of the trade and commerce, I had exempted paneer, feni, dhoop, agarbatti, guchchee, gul banafsha, and anardana from charging of VAT Tax. On similar demands made this year, I propose to exclude sale of Amlok, Katlam, Sarkori, and Kalaari from charging of VAT from the next financial year.
J&K Women’s Development Corporation is bringing jute fabric from outside the State for conversion into bags by a large number of women workers. These bags are being supplied to Shri Mata Vaishno Devi Shrine Board for packing prasad for the yatris. Since this is a big welfare programme, involving a large number of women workers, I want to lend support to this cause. I announce to exempt jute fabric brought into the State by J&K Women’s Development Corporation from payment of Toll at Lakhanpur.
Registration under GST Act
Section 6 of the State GST Act provides for mandatory registration of all dealers except those falling under the exempted category. The detailed procedure for registration as well as charging of security from the dealers is prescribed in the J&K GST Rules. The provisions apply universally to all categories of dealers and provide for a mandatory inquiry before issuing a registration certificates. It has been brought to my notice that such a mandatory enquiry in respect of the dealers already registered with another government department causes avoidable work and hardships. In order to simplify the procedure and reduce non-productive paper work, I propose the following concessions at the time of registration in respect of certain categories of dealers:
a. Such of the dealers who are already registered with any other Government department such as tourism establishments, SSI and Medium Scale Industry, micro-enterprises and Works Contractors shall not be necessarily required to be put to any additional scrutiny or re-verification to be caused by the CTOs as presently mandated under Rules 7 to 8-A of the J&K GST Rules.
b. Such of the dealers in whose case deduction of GST/ Service Tax at source has been made mandatory at the time of release of payments by the concerned paying authorities, and who do not indulge in any other independent business of sales and purchase, shall not be necessarily required to deposit any additional security amount with the Commercial Taxes Department, particularly if they have already deposited any such security with their original registering authorities.
New rates of passenger tax have been notified under SRO 466 issued on the 16th of December 2010. In consideration of the fact that the rates have been revised after a gap of 11 years, the government fixed the new rates which are considered quite reasonable. However, the Transport industry representing the Bus operators has pleaded that a sudden hike cannot be easily passed on to the consumers and the Industry will find it difficult to absorb the increase in their operating expenses. The government has got this demand examined again. I accordingly announce a decrease in the compositioned rates of passenger tax on Buses other than luxury buses, from Rs 300 per seat per annum to Rs 250 per seat per annum.
Additional Resource Mobilization
I now come to the last part of my budget speech, dealing with my constitutional obligations to carry out periodical interventions in taxation matters.
Revision of Toll rate
Honorable members of this August House are aware that Toll chargeable at Lakhanpur is not charged on ad valorem basis. It is charged on the basis of weight of the commodity regardless of its value. As the prices of commodities are regularly moving up, it is necessary that the Toll rates should be corrected periodically. I propose a modest increase of five paisa per kilogram in the existing rates of Toll from the next financial year.
Toll on sheep and goats
Sheep and goats are being brought into the State to meet the requirement of mutton. They are presently charged Toll at Lakhanpur at the rate of Rs 35 per head regardless of their individual body weight. The process of counting of such animals while loaded in a truck is tedious and also time consuming. For purpose of simplification, I propose to change this rate to Rs 2.50 per kg or Rs 250 per quintal from the next financial year.
Toll on poultry
Poultry birds purchased from outside the State for table purposes are being charged Toll at the rate of Rs 5 per kg. Keeping in view the over all increases in the commodity prices since then, I propose to increase this rate to Rs 6 per kg.
Toll on raw tobacco and edible oil
The rates of Toll on these two items were last revised in March 2007 and continue since then at Rs 140 per quintal for edible oil and Rs 150 per quintal for raw tobacco. I propose to enhance the Toll on edible oils to Rs 200 per quintal and the Toll on raw tobacco to Rs 250 per quintal from the next financial year.
Taxes on tobacco and tobacco products
Consumption of tobacco and tobacco products is injurious to public health. Hundreds of people loose their lives due to cancer caused by smoking. This menace has to be checked by education of the public. Apart from the government efforts and legislative measures, the role of the voluntary social organizations in launching campaigns against smoking needs to be encouraged.
The present rate of VAT on cigarettes is 13.5% while on beedi no VAT is charged. I propose to charge 25% tax on cigarettes; cigars; cigarillos; cigarette and cigar holders; cigarette and cigar cases; smoking pipes and pouched tobacco; gutka and beedis. The additional revenue generated from this measure will be handy to meet the needs of the State Cancer Treatment and Management Fund created as per the announcement made by me in the last budget session, as also to take other measures needed to check the menace of smoking and prevention of cancer.
Tax on Services
Services are making a large contribution to the GDP globally as well as at the national level. In our State we are presently taxing only 17 services. I propose to add the following items to the present list :-
1. Services provided by commercial concerns in relation to new construction, repairs, alterations or restoration of buildings, civil structures or parts thereof.
2. Services provided by way of TV and Radio programme productions,
3. Services provided by the Architects.
4. Services provided by the Interior Decorators,
5. Services provided by the Chartered Accountants,
6. Advertising services by providing hoardings
At the end, I would like to say again that the man made disruptions of peace and order have already taken heavy toll of socio economic development of the State, particularly in the Valley of Kashmir and other disturbed areas. Now, every passing year is extremely precious for reconstruction and restoration. We must avail every moment for betterment of the people. Let’s join together to realize the dream of Naya-Kashmir, free from wants; disease; educational backwardness; and parocheal, sectarian and regional prejudices. We all have our individual opinions on public issues as also our different political ideologies. However, for the sake of the people, let’s come forward to make a common cause.
The elements who have been wanting the people of the State to remain backward, should realize that their approach is misguided, anti-people and self destructive.
The coalition government led by Janab Omar Abdullah Sahib has remained undaunted all along and has been successfully carrying out its obligations to the people who have mandated it to usher in an era of peace, progress and prosperity. The government is fully determined to re-double its efforts to create a better tomorrow for the people of the State, particularly our youth to whom the future belongs.