The last time a tax increase had been made in the state
was on April 1, 2006.
Modi said the tax hike would yield an additional Rs 450
crore annually to the state exchequer, which would be
used to support welfare schemes, including the CM's
Cycle Yojana and CM Poshak Yojana.
Incidentally, the report of the Comptroller and Auditor
General of India (CAG) for the 2009-10 fiscal, released
last week, had noted that the state government ought to
find means to increase its revenue receipts through both
tax and non-tax routes, if the state does not have to
get caught into debt trap.
The CAG's advisory meant that the debt incurred by the
state should be sustainable. In this context, the tax
hike announced in the 2011-12 state budget gains
contextual significance and relevance with the fiscal
situation, as assessed by the CAG.
In keeping with the rise in taxes, VAT on some
Schedule-3 items has been increased from four to five
per cent, while the tax charged on items like motor
vehicles, TV, fridge, cosmetic items, zarda and
cigarette would now be 13.5% compared to 12.5% earlier.
Besides, the new 10% luxury tax charged for holding
functions (conferences, workshop, exhibitions and
various social functions) utilising venues like hotel,
halls or open-air grounds also became effective from
Modi said the tax hike had been announced in keeping
with the decision taken at the empowered committee of
the finance ministers of all the states. The tax
increase on select items has also been made in states
such as Gujarat, Rajasthan, Uttar Pradesh, Karnataka and
Madhya Pradesh, among others.
Speaking at a function on Monday, Modi said the NDA
government, in the last five financial years, not only
improved the law and order situation, but also managed
to make business-friendly atmosphere in the state, which
resulted in relative decrease in migration of people to
other states. Moreover, traders and business circles
enjoyed security, he added.
Modi, while reviewing the revenue collection, directed
the officials of commercial taxes department to maintain
the tempo of collection. During the 2010-11 fiscal, the
department netted a revenue of Rs 6,666 crore, which is
Rs 1,131 crore more than Rs 5,535 collected during the
He also said the department should achieve 100%
computerisation as part of the e-governance initiative,
during the current fiscal, and also asked traders to go
Times of India, India, dated