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Karnataka budget gives a tax jolt

Published On : 06 Jul 2018   |  Reported By : Courtesy: DHNS   |  Pic On: Photo credit DHNS


Bengaluru, (DHNS): Chief Minister H D Kumaraswamy, in his maiden budget of the coalition government on Thursday, proposed to impose additional taxes on petrol, diesel, liquor, electricity and private motor vehicles to fund a Rs 34,000-crore crop loan waiver scheme. With additional taxes being imposed on petroleum products and electricity, almost every section of society will shell out more in the coming days. To be in the good books of his alliance partner the Congress, the chief minister has made a commitment that all programmes announced by his predecessor Siddaramaiah in his budget presented in February this year, will continue. Kumaraswamy, who also holds the Finance portfolio, increased sales tax on petrol and diesel by two percentage points. This will result in petrol prices increasing by Rs 1.14 and diesel by Rs 1.12 per litre.

All brands of liquor will cost more as Additional Excise Duty (AED) has been increased by 4% across the board. This will be the second upward revision on liquor in the past four months as it is over and above the 8% hike effected by Siddaramaiah in February this year. According to sources in the excise department, there will be a hike of at least Re 1 on the maximum retail price on a 180 ml bottle of the cheapest liquor available in the market. However, beer has been spared from a hike. There will be a hike in power bills from next month as Kumaraswamy has increased taxation on consumption of electricity from the existing 6% to 9%. This again is across the board, affecting all categories of consumers, including domestic. Besides, the ride to the office on a private omnibus or cab hired by companies to ferry their employees will be costlier as the motor vehicles tax has been hiked for such vehicles. All these hikes will come into effect from August 1.

In an attempt to regulate the use of plastic, chief minister said the government will empower local bodies to impose 3% cess on the MRP of goods packed with plastic. The fee collected will be used for reprocessing plastic for the conservation of the environment. The taxation measures are estimated to generate an additional Rs 3,176 crore. Farmers hit jackpot The biggest beneficiaries of the budget are the farmers with the JD(S) keeping its pre-poll promise of crop loan waiver. A total of 44.89 lakh farmers who have availed loans from cooperative institutions and nationalised banks will benefit.

Kumaraswamy has set a cap of Rs 2 lakh for the waiver scheme but even then it will cost the state government a whopping Rs 34,000 crore, Karnataka’s biggest so far. However the chief minister has not spelt out how he will mobilise this huge amount over the next four years. The beneficiaries of the loan waiver include 17.32 lakh defaulting farmers. The CM announced that the government will credit Rs 25,000 to the accounts of 27.67 lakh farmers who have already repaid their loans. The loans will be waived in one shot but the government will reimburse the banks over a period of four years. Huge borrowings The chief minister will go in for huge borrowings to ensure funds for schemes announced by the previous government and for infrastructure projects. The government will end up borrowing Rs 47,137 crore this financial year, which is Rs 7,806 crore more than what Siddaramaiah had planned in February. Apart from the crop loan waiver scheme, there are no big-ticket announcements in the budget. To keep voters of Bengaluru happy, Kumaraswamy announced the construction of six interconnected elevated corridors. “The budget reflects the stand of the coalition government, its dreams and realities, and difficulties and challenges,” Kumaraswamy said in his speech. The total budget outlay has been fixed at Rs 2.18 lakh crore, which is Rs 9,307 crore more compared to Siddaramaiah’s February budget.







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