Karnataka State Budget Tax Proposals for 2010-11

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Mar. 8 – The following are highlights of tax proposals submitted for the Karnataka State Budget 2010 -11 ranging from commercial taxes to luxury tax and entry tax.

Value added tax

  • VAT exemption on paddy, rice, wheat, pulses and products of rice and wheat extended for one more year beginning January 4, 2010
  • Tax on masala powder mixtures, macaroni, sports trophies, shields and medals, scrap metal, electric generators of less than 15 KVA, railway concrete sleepers, school bags costing up to Rs 200, reduced from 12.5  percent to 5 percent
  • The minimum annual turnover limit for registration increased from Rs. 2 lakhs to Rs. 5 lakhs
  • The maximum annual turnover limit for opting for Composition Tax Payment Scheme increased from Rs.15 lakhs to Rs.25 lakhs
  • Annual turnover limit for compulsory audit of accounts of dealers increased from Rs.40 lakhs to Rs.60 lakhs
  • Optional scheme for dealers in medicines to pay tax based on the MRP even on sale of other goods
  • Advance ruling mechanism for dealers to seek clarifications and advance rulings to be introduced

Resource mobilization measures

  • VAT rate 4 percent increased to 5 percent on all goods except declared goods
  • VAT rate of 12.5 percent increased to 13.5 percent
  • VAT rate of 12.5 percent on tobacco products increased to 15 percent
  • Levy of VAT on tobacco products on MRP basis

Luxury tax

  • Luxury tax on hotels with daily room rents from Rs.1,000 to Rs.2000 increased from 6 percent to 8 percent
  • Luxury tax on hotels with daily room rents exceeding Rs.2,000 increased from 10 percent to 12 percent

Entry tax

  • Provision for collection of entry tax on sugar at the point of sale by sugar factories

Facility to taxpayers

  • Facility for electronic submission of returns and other documents and also payment of tax

Karasamadhana scheme

  • Relief extended in payment of interest if sales tax arrears are paid before June 30th 2010.

State excise

  • 10 percent growth expected through normal growth and intensification of enforcement activities
  • Rs. 7,500 crore of revenue expected

Revision in stamp duty rate

  • Stamp duty on sale agreement reduced from 0.25 percent to 0.1 percent limited to a maximum of Rs.20,000
  • Stamp duty on joint development agreements and GPA at 1 percent of market value limited to a maximum of Rs.1.5 lakhs
  • Stamp duty on agreements relating to shares, debentures and other marketable securities reduced from Rs.200 to Rs.50 and on note or memos given to brokers, depositors and fixed at 0.01 percent limited to a maximum of Rs.50. o stamp duty on DTD reduced from 0.25 percent to 0.1 percent limited to a maximum of Rs.50,000
  • Amendment to Act to plug evasion of stamp duty in transfer of apartment/flat
  • Provision for adjustment of duty when property is sold to GPA holders
  • Rationalization of fee for cancellation of deeds
  • Stamp duty on amalgamation and demerger of companies reduced from 5 percent to 3 percent
  • Levy of stamp duty at 1 percent on TDR agreements
  • Further rationalization in stamp duty on lease and license of properties for duration of less than 1 year stamp duty of 0.5 percent and a maximum of Rs.500 for residential buildings levied. From 1 year to 10 years 1 percent on average annual rent and advance, from 10 years to 20 years 2 percent, above 20 years up to 30 years 3 percent
  • Exemption in stamp duty and registration fee on clearance certificates relating to loans availed by farmers, rain water harvesting units, student education, non-conventional energy source units like solar, biogas and houses built under Indira Avas Yojane
  • Total stamp duty and registration fee exemption on documents relating to transfer for public purposes to local bodies and urban development authorities
  • Estimated collection of revenue for the year 2010-11 is Rs.2200 crore
  • Increase in quarterly tax on two wheelers purchased by central government employees from Rs. 25 to Rs. 125 and on other vehicles from Rs. 187.50 to Rs. 500
  • Lifetime tax scheme extended to light goods vehicles up to 5,500 kilograms. This scheme applicable to even goods vehicles already in use
  • Increase in quarterly tax on stage carriages from Rs.500 to Rs.600 per seat
  • Increase in lifetime tax on two wheelers
  • Increase in lifetime tax on cars and jeeps
  • Increase in quarterly tax on omni buses with national permits from Rs.2,500 per seat to Rs.2,750
  • Life time tax of 10 percent levied on all construction equipment vehicles such as cranes, mobile cranes and forklift

Motor vehicles tax