Jammu and Kashmir - Rather presents Budget 2011-12

In its annual budget 2011-12, presented in both the Houses of state legislature, J&K government Monday nearly doubled value added tax on cigarettes and cigars, raised toll tax on tobacco, livestock and edible oils but exempted pesticides, insecticides and weedicides from tax purview. The budget proposed a partial decrease in the passenger tax.


The government also announced 10 per cent DA payable to its employees from July 2010. While the employees shall draw the amount of enhanced DA along with their pay from April 2011, the arrears from July 2010 up to March 31, 2011 will be credited into their GP Fund Accounts.

In another important decision the government announced Beti Anmol’ scheme for 97 educationally backward blocks, while further proposing to bring services such as chartered accountants, advertisers, new constructions, repairs, services provided by production houses of TV and radio programmes, architects and interior designs, among others, under the tax net.

Presenting the ‘zero-deficit’ budget for 2011-12 in the State Legislative Assembly, the Finance Minister Abdul Rahim Rather announced some relief to industrialists by extending VAT remission for another year (implication of around Rs 500 crore) and replacing the quarterly verification of raw material consumption through annual mode.
The Finance Minister, who presented the budget for third consecutive year of this government projected the State’s total budgetary receipts at Rs 31,212 crore for fiscal year 2011-12 indicating an increase of 20 percent over current year’s Budget Estimate figure of Rs 25, 984 crore. The fiscal deficit has been pegged at Rs 2979 crore.


In what may be termed as the only attractive decision made in the budget, the Finance announced a new initiative of the state government – Beti Anmol – which shall be applicable in the 97 identified educationally backward blocks, for the girl students belonging to the families living under Below Poverty Line.

The minister said that under proposed scheme the girl students who pass matriculation examination and get themselves enrolled in the 11th class, shall be given incentive in the shape of a bank deposit amount of Rs 5,000, which shall be encashable by them on passing their higher secondary studies.


The FM also announced that the government will be bring a new legislation, during the ongoing session, regarding levy of Stamp Duty. An exclusive organization for administration of Stamps Duties and Registration on the pattern followed in other States is likely to be the main feature of the new legislation.


The government, he said, is examining the possibilities of inducting a larger number of employees in a stipendiary mode, as in the case of Rehbare-Taleem Scheme. The modalities of this scheme are being worked out so that the same is adopted for implementation from the next financial year.


Remaining non-commital about the sixth pay commission arrears demand of the state government employees, the finance minister said that a roadmap has been formulated whereby 50 per cent of the arrears in varying number of installments has to be credited to the GPF Accounts of the employees and a government order has also been issued in this regard. The estimated 86 expenditure on the first installment payable during the year 2011-12 is Rs 525 crore, he said.

However, he proposed a new roadmap for the senior citizens who are drawing government pensions. As per the road map, the pensioners are to receive 50% of their arrears in three or more annual installments.

“I propose to pay off these arrears in just one installment to such of the pensioners who shall attain the age of 90 years or above on April 1, 2011. Similarly, the pensioners in the age group of 80 to 90 years on April 1, 2011 shall be paid these arrears in two annual installments”, he added.


The finance minister announced release of DA installment of the government employees. An installment of DA payable @ 10% had become due with effect from the July 1, 2010.

“The government has decided to release this installment retrospectively with effect from its due date. The employees shall draw the amount of enhanced DA along with their pay for the month of April 2011. The arrears from July 1, 2010 up to March 1, 2011 shall be credited into their GPF Accounts”.

He said that increase of 10% in DA shall also be sanctioned in favour of the pensioners who would get their arrears in cash during the next financial year.

The total financial implication on account of this installment of DA for employees and pensioners shall be 700 crore annually. Besides, additional 500 crore shall be involved in payment of arrears, he added.


Rather proposed an increase in the wages of daily wagers from Rs 110 to Rs 125 per day which will be effective from the next financial year. These wages were earlier increased by the government in August 2009 from Rs 70 to Rs 110 per day.


As a step, which the finance minister termed as economic empowerment of farming community, the government exemption of Pesticides, weedicides and insecticides from the preview of VAT besides exemption of the tax on the installation of Poly Houses and Green Houses.

The finance minister said that from the next financial year the government will also refund tax chargeable under the J&K VAT/ GST Acts, to all such beneficiaries who buy various kinds of equipments and systems from manufacturers and suppliers or install them in their green houses, fields, orchards and farms.

Rather announced extension of GST/VAT exemption as enjoyed by the industrial units in the state for a further period of one year or adoption of GST Act by the State, whichever happens to be earlier.

As per a rough assessment, the cost of this concession has been worked out to be around five hundred crore of rupees annually.

The total GST exemption on the rental income of hotels, guest houses and lodges has also been extended for the next financial year.

Keeping in view the huge inflow of pilgrims to the state the finance minister further announced exemption of Hawan Samagri (paneer, feni, dhoop, agarbatti, guchchee, gul banafsha, and anardana) from charging of VAT Tax.

The finance minister further announced exemption from the levy of toll tax on milch animals (imported from outside the state), rice bran and wheat bran, bee hives and the bee colonies (transported seasonally through Lakhanpur) and jute fabric brought into the State by J&K Women’s Development Corporation.

He announced a decrease in the compositioned rates of passenger tax on Buses other than luxury buses, from Rs 300 per seat per annum to Rs 250 per seat per annum.

The FM further proposed to charge 25% tax on cigarettes; cigars; cigarillos; cigarette and cigar holders; cigarette and cigar cases; smoking pipes and pouched tobacco; gutka and beedis. Presently VAT on cigarettes is charged at the rate of 13.5% while on beedi no VAT is charged.

He said that additional revenue generated from this measure will be handy to meet the needs of the State Cancer Treatment and Management Fund created as per the announcement made by me in the last budget session, as also to take other measures needed to check the menace of smoking and prevention of cancer

The government also brought various services including, services provided by commercial concerns in relation to new construction, repairs, alterations or restoration of buildings, civil structures or parts thereof, Services provided by way of TV and Radio programme productions, services provided by the Architects, services provided by the Interior Decorators, services provided by the Chartered Accountants and advertising services by providing hoardings under the Tax preview.


The FM announced five paisa per kilogram increase in the existing rates of Toll from the next financial year.

He proposed to enhance the Toll on edible oils to Rs 200 per quintal and the Toll on raw tobacco to Rs 250 per quintal from the next financial year.

In a move which is all set to increase the rates of meet in the state, the FM also announced that from the next financial year the Rs 2.50 per Kg will be charged as toll tax on the sheep and goats being brought into the state. As of now the government is charging at the rate of Rs 35 per head regardless of their individual body weight.

Similarly, the toll tax on the poultry was also enhanced from Rs 5 to Rs 6 per kg.


On revival of state finances through additional resource mobilisation, Rather said, "I am placing the target of tax revenue collection for the next fiscal at Rs 4,183 crore as against current year''s tax figures of Rs 3,505 crore."

Of the total collection targets, budgetary estimates for VAT collection has been kept at Rs 3,025 crore aiming to increase Rs 514 crore over current year''s tax estimate of VAT of Rs 2511 crore.

The collection on account of Excise Duties has been targeted at Rs 333 crore and Rs 382 crore on Goods and Passengers. Vehicles and Stamp Duties are expected to contribute ` 123 crore and ` 76 crore respectively to the state exchequer.


The FM claimed that the state would be generating around Rs tax 1,620 crore revenue under non-Tax revenue during the next financial year. Power Development Department, Mining, Forestry, Water Supply and Health Services are expected to major contributors.


Rather said that the state government has undertaken a major structural reform which will clear off the long pending and never ending over draft liabilities of the State Government in its official account with the J&K Bank. For this purpose, he said, measures to raise a sum of Rs 2,300 crore through the mechanism suggested by the Thirteenth Finance Commission have been already initiated.

The State Government, he said, had already signed an agreement with the Reserve Bank of India in September 1972 for its debt management and it has now signed a supplementary agreement authorizing it to carry out the responsibility of our cash management as well.

Under this arrangement, the J&K Bank, he said, shall continue to deal with the accounts of the J&K Government in the same manner as it has been dealing in the past, through the available net work of the government treasuries but with the added advantage of RBI supervision and expertise.


Increase in VAT on cigarettes from 13.5 percent to 25 percent. New VAT rate on cigars, cigarillos; cigarette and cigar holders, cigarette and cigar cases; smoking pipes and pouched tobacoo, gutka and beedis are to be levied.

Toll on Sheep and Goats rationalized from ‘by number’ to ‘by weight’.

Hike in Toll on edible oils to Rs 200 per quintal and the Toll on raw tobacco to Rs 250 per quintal from the next financial year

Change in Toll at Lakhanpur on sheep and goats to Rs 2.50 per kg or Rs 250 per quintal from the next financial year. It was being charged at the rate of Rs 35 per head regardless of their individual body weight.

Service tax on new items: New construction, repairs, alterations or restoration of buildings, civil structures and parts, TV and Radio Programme productions, services provided by Architects and Chartered Accountants and Advertising services by providing hoardings.

Toll goes up by 5 paise per kg.


Food commodities like atta, maida, suji, besan, paddy, rice etc are exempted from levy of VAT upto March 31, 2012.

Exemption from payment of GST to industrialists extended for a period of one year or till adoption of Goods and Services Tax (GST) by the state.

No VAT on room rent charged by the hotels, lodges and guest houses for next year.

VAT reduced to zero on Hawan Samagri, Katlam, Kalaari, Amlok, Sarkori. Toll exempted on Jute to promote ‘Green Packaging’

VAT exempted on pesticides, insecticides and weedicides


Estimates of Total receipts (TR) at Rs 31, 212 crore

Estimates of Total Expenditure (TE) also at Rs 31, 212

Non-plan salaries and pension up at Rs 14, 011 crore including Rs 525 crore for payment of Pay/Pension Revision Arrears installment

Annual Plan 2011-12 size Rs 6600 crore, PMRP at Rs 1200 crore

Plan Revenue Expenditure (PRE) estimates at Rs 1178 crore. Plan Capital Expenditure (PCE) Rs 6622 crore


* ‘Daily Wage’ rate hiked to Rs 125/day from April.

* ‘Beti Anmol’ rolled out for dropout girl students.

* Employees and pensioners to get 10% DA.

* Senior pensioners between 80-90 to get 50 % arrears.

* 18 new Polytechnic Colleges being established.

* Rs 8 crore for migrants’ Health Insurance.

* Bijli Adalats for disputes settlements.

* Loan slab for artisans raised.

* Subsidy of Rs six crore for 1000 sheep units in pvt sector.

* Trainees’ stipend in handloom and handicrafts sectors hiked.

* Rs 10 crore for interest subsidy to boost handicrafts sector.

* Rs 2.5 crore each for revival of JKHDC and Govt Woollen Mills.

* SFC to be reviewed.

Source: GreaterKashmir.com (press release), India,  dated 07/03/2011


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