Claiming to have presented a “development” oriented Budget with equal focus on social sectors and infrastructure for a rapidly urbanising state, the Gujarat government on Tuesday presented a Budget for the year 2015-16 that offered tax sops for isabgol processing industry, oral contraceptive pills and imitation jewellery industry, while at the same time imposing fresh tax on technical textiles manufacturers.
“Oral contraceptive pills are presently taxable. These pills are used for the purpose of family planning. I therefore propose to fully exempt the oral contraceptive pills from the current rate of tax of five per cent, including additional tax,” the minister said while presenting the tax proposals in the Gujarat Assembly.
Similarly, pointing out that new isabgol processing units are coming up in neighbouring states due to full tax exemption, Patel proposed to fully exempt isabgol and isabgol husk from the current rate of tax of five per cent. This step according to the minister will “encourage farmers to grow more isagbol” and “retain/sustain the foreign exchange and the agro processing activities involved in this industry”.
The minister also reduced the rate of tax on Aviation Turbine Fuel from current rate from 30 per cent tax (for duty paid ATF) and 38 per cent (for bonded ATF) to five per cent, when sold from cities other than Ahmedabad and Vadodara for scheduled commercial airlines service flights. According to Patel, this was being proposed to encourage flight operators to operate aircraft from smaller cities in Gujarat and to make the tickets from these locations cheaper.
The state government also proposed to cut tax from five per cent on imitation jewellery industry to one per cent, to help “maintain the employment and sustain this industry”.
In order to encourage usage of khadi and to avoid the tax burden on purchase of cotton roving, the minister proposed to give refund of the tax paid on current rate of five per cent tax, including additional tax on cotton roving purchased for manufacture of above products by the Khadi Gram Udyog Board approved institutes.
Due to the proposed tax relief, the state government stands to lose revenues to the tune of about Rs 20 crore.
However, the state government has proposed to impose a tax of 5 per cent (including additional tax) on technical textiles which is used in industries like building construction, civil engineering, furniture, household textiles, floor coverings, automobiles, shipping, railways, packaging.
The minister later said that similar tax on technical textiles exists in other states.
This new tax will provide Rs 80 crore in revenues to the government. This tax is expected to push the overall surplus figure of 2015-16 state Budget from an estimated Rs 125 crore to about Rs 185 crore.