Analysis of Maharashtra Budget 2016-17


Maharashtra Finance Minister Sudhir Mungantiwar presented the second budget of Fadnavis Government on 18th March 2016. The Fadnavis Government knows the current situation of the farmers in the state. Therefore, this budget 2016-17 is dedicated to our farmers.

Due of severe drought in the state Maharashtra Budget for 2016-17 has proposed Rs. 25,000 crore for various schemes in Agriculture sector. It also increased certain taxes such as VAT and offered some exemptions for sugarcane and profession tax. Exemption from levy of Sugarcane Purchase Tax for the year 2015-16 will be given to the sugar factories which export sugar as per the government policy.

Changes in VAT Rates

VAT rate has been increased from 5% to 5.5% excluding declared goods.

The finance Minister has proposed to raise the Motor Vehicle Tax on two and three wheelers. This tax will be based on engine capacity – up to 99cc, 8%; 100cc to 299cc 9 per cent, 300cc and above 10%. Institutional and imported vehicles will be subjected to double the rate of tax. This change certainly not only increases the burden of the common man, to buy the two or three wheelers but also suffer the automobile industry.

VAT on coconut hair oil sold in packs of up to 500 ml has been enhanced to 12.5%.

For promoting the textile industry, exemption of VAT will be given on warping and sizing of yarn.

VAT on the mammography machines used for detection of breast cancer will also be exempted. VAT on sterile water for injections will be reduced from 12.5% to 5.5%. This is welcome move, which reduces the health cost of the common man.

VAT on retrofit kit fitted to vehicles for physically handicapped would be exempted. VAT on LED tubes and pyrolysis oil has been reduced from 12.5% to 5.5%.

VAT on steel wire mesh, barbed wire, chain links, pencil box, stapler pins, dusters, gum and gum-sticks used by students has also been reduced from 12.5% to 5.5%.

It has been exempted for bamboo products, excluding bamboo furniture.

The VAT composition tax rate will be 8% for hotels and restaurants having turnover of sales Rs. 3 crore and more.

Some smile on the face of professional tax payers

Profession Tax exemption will be given to the personnel of CRPF and BSF.

Exemption will also be given from late fee to the government aided educational institution for e-filing of Profession Tax returns.

The amnesty scheme is proposed for professional tax payers, the interest and penalty will be waived for dues up to March 31, 2005 subject to full tax payment. For disputed dues from April 1, 2005 to March 31, 2012 subject to full tax payment, 25% interest payment under VAT Act and balance dues will also be waived.


Some other welcome amendments

Amnesty scheme under Industrial Policy 2013 for closed and un-revivable units will be implemented afresh.

Logistic hubs will be established to promote the logistics industry and levy of CST will be exempted on the interstate sales effected from the logistic hubs, he said.

There will be levy of entry tax on marble and granite slabs and increase in lottery tax on the draws of lotteries.

Input tax ledger will be made available to the tax payer.

A pilot project will be started by Sales Tax Department for implementation of digital billing system.

Finance minister also announced establishment of Advance Ruling Authority for speedy disposal of disputed issues under Sales Tax Laws and implementation of SAP based computer system in the Sales Tax Department.

Changes in composition scheme

Turnover limit for composition to retailers under the MVAT Act has been increased from Rs 50 lakh to Rs 1 crore.

For the bakery industry, the turnover of tax free goods would be excluded for computing the turnover for composition.

Final Words

I can say Maharashtra Budget 2016-17 is good budget not only for farmers but also common taxpayer. I welcome the amendments of the reduction in VAT rate of mammography machines, sterile water for injections, pencil box, stapler pins, dusters, gum and gum-sticks etc. I also appreciate the move of amnesty scheme for the professional tax, which certainly generates the smile on the face of taxpayers. The finance minister has tried to make farmers and taxpayers happy. I think he succeed in the same to some extent.

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