Bengaluru, DHNS: Additional revenue will be spent on developing rural roads. The hike in sales tax on petrol and diesel will fetch the government an additional Rs 850 crore.

Speaking at his post-budget press conference in Bengaluru, Chief Minister Siddaramaiah said the additional resources mobilised through the hike in sales tax on petrol and diesel will be utilised for development and maintenance of rural roads.

Siddaramaiah, who also holds the finance portfolio, has increased rate of tax on petrol from 26% to 30% and diesel from 16.65 to 19%. In absolute terms, the hike will result in petrol costing more by Rs 1.89 per litre and diesel by Re 0.98 per litre. The hike will come into effect from April 1. Karnataka is among states which levy the highest tax on petroleum products. In addition, five% entry tax is levied on every litre of petrol or diesel coming into the State.

The chief minister defended the move to hike sales tax of fuels by stating that the Centre increased the excise duties on petrol and diesel thrice during the last one year to compensate for the loss in revenue due to slash in crude oil prices, but the State government did not increase the tax rate.

Siddaramaiah has also tinkered with the commercial tax rates on a number of commodities. The Value Added Tax (VAT)?on soft drinks has been increased from the present 14.5 to 20 per cent. If the manufacturer decides to pass on the hike to the consumer, a 200 ml bottle of soft drink would cost more by a minimum of Re one.

Two staple food products of north and south Karnataka jowar roti and ragi roti respectively have been exempted from VAT. Also aluminium household utensils (except pressure cookers and cutlery) have been exempted from VAT. Exemption from VAT for paddy, rice, wheat, pulses and products of rice and wheat has been continued for one more year.

VAT cut on helmet, LED

The VAT?rates on a number of items has been reduced from 14.5 to 5.5 per cent. These include LED bulbs, helmets, set-top boxes for TV, cotton, handmade paper and products, varieties of chutney pudi (powder), office files made of paper/paper boards, surgical gowns, masks, caps, drapes of single use made of non-woven fabrics and multi-media speakers.

“The VAT rate on LED?bulbs has been slashed to encourage more people to shift to the low-energy bulbs. We have also cut the VAT?rates on helmets as the safety gear has also been made mandatory for pillion riders,” commercial taxes commissioner Ritvik Pandey said.

Agri income tax scrapped

The State government has decided to do away with Agricultural Income Tax (AIT). The commercial taxes department used to collect AIT?on commercial crops like coffee, tea, rubber as per the provisions of the Karnataka Agricultural Income Tax Act, 1957.

It was a long-standing demand of planters that AIT be abolished as it led to multiple taxation. The department had collected AIT to the tune of Rs 19.77 crore in 2014-15.

What they say...

This is the worst budget of all times. The borrowings are increasing by the day. There should have been an increase in plan expenditure and additional grants for developmental projects. But the reverse is happening. This could lead
to economic disaster.
B S yeddyurappa, BJP leader

It is a very disappointing budget. Hike in sales tax on petrol and diesel and additional tax on private vehicles will burden the common man. It’s a lifeless budget and the concerns of the people of North Karnataka have been ignored. Irrigation and agriculture sectors have been neglected.
Jagadish Shettar, BJP leader