With an eye on the Assembly election scheduled next year, Tamil Nadu chief minister O Panneerselvam, also holding the finance portfolio, offered sops for the fishermen and manufacturing sector, and proposed no new tax in the R4,616.02-crore deficit Budget for FY16.
Against the projected revenue receipt of R1,42,681.33 crore, revenue expenditure is estimated at R1,47,297.35 crore, leaving a revenue deficit of R4,616.02 crore. The capital expenditure is projected at R27,213.17 crore. The fiscal deficit is estimated at R31,829.19 crore. The Budget proposes to raise the net borrowings to R30,446.68 crore, which is less than the permissible limit of R32,990 crore. The overall outstanding debt will be R2,11,483 crore by FY16 end.
Based on the estimates, the fiscal deficit will remain at 2.89% of gross state domestic product (GSDP) and the debt-GSDP ratio will be 19.23% which is below the norm of 25%, said chief minister O Panneerselvam.
Panneerselvam said: “Notwithstanding the financial burden due to the 14th Finance Commission recommendations and with slow growth in state own tax revenue (SOTR) owing to sluggish economic environment, the state government has decided not to tax the people. We have decided to encourage the manufacturing sector in a big way with a slew of tax concessions.”
As per the Budget tax concessions, electricity tax on generating plants using biomass (excluding bagassee) will be withdrawn to give a boost to the green energy producers; input tax credit reversal imposed at the rate of 3% on the inter-state sale of goods as per provisions of Section 19(2) (v) of Tamil Nadu Value Added Tax Act 2006 will be withdrawn, henceforth, to make the manufacturing industries in Tamil Nadu more competitive.
Fishing accessories like fishing ropes, fishing floats, fishnet twine, fishing lamps and fishing swivels will be exempted from the present levy of VAT.
Mosquito nets of all kinds will be exempted from the present levy of VAT at 5% and works contract relating to sizing of yarn will be exempted from the present levy of VAT.
VAT on cardamom will be reduced from the present 5% to 2% and VAT on LED lamps of all kinds will be reduced from the present 14.5% to 5% to encourage the use of energy-saving devices.
To boost the manufacturing sector, VAT on air compressors, pump sets up to 10 hp and their parts, thereof, will be reduced from the present levy of 14.5% to 5% to benefit the farmers, the CM said. VAT on mobile phones will be reduced from the present levy of 14.5% to 5%. “The tax concessions will result in loss to the exchequer to the extent of R650 crore per annum,” the chief minister said.
He said the share in central taxes devolution is projected at R21,149.89 crore while the grants-in-aid from the central government is projected at R16,376.79 crore. Thus, the revenue receipts for 2015-2016 is projected at R1,42,681.33 crore. “The government is not increasing any taxes to mobilise more resources but will rely more on improving the administration and tightening the collection system to realise the above revenue projections,” said the chief minister.
“We feel that increasingly the state has to rely more on its own strength, which is evident from the fact that share of state own resources in the revenue receipts, which is 71.06% during 2014-2015 has gone up to 73.70% in our budget projections for 2015-2016,” said the chief minister.