Maha budget levies tax on tobacco, liquor; spares foodgrains

MUMBAI: In a budget aimed at containing inflation and mobilising revenue for infrastructure projects, the Maharashtra government has spared foodgrain, flour and a few other essential commodities from VAT but levied a whopping 12.5 per cent state tax on cigarettes, gutka and raised excise duty on country liquor.

Projecting an impressive 9.3 per cent economic growth, Maharashtra Finance Minister Jayant Patil presented a Rs 510 crore revenue surplus budget for 2007-08 in the state assembly.

Contrary to expectations, Patil did not announce any roadmap to abolish octroi as demanded by trade and industry in the budget, which estimates revenue to grow by 13.33 per cent improving fiscal management by lowering debt burden by two per cent to 25.53 per cent of state GDP.

The exemption from VAT to foodgrain, flour, chillies, turmeric, coconut, solapuri chaddar and tea will continue for another six months, he said while raising VAT to 12.5 per cent on cigarettes, gutka and other tobacco products.

But Bidis and manufactured tobacco were exempted from the state tax.

Excise duty on country liquor was increased by Rs 5 to Rs 60 per litre and the minimum retail price on Indian Made Foreign Liquor would be four times the manufactured cost if it is below Rs 92 per litre.

These and a few other tax measures will enable the state mobilise some additional revenue to make up for the loss of Rs 1,000 crore as a result of the phased out Central Sales Tax which would reduced from four to three per cent in 2007-08.