Maha govt abolishes LBT, extends tax exemption on rice, wheat

Maharashtra today announced Local Body Tax (LBT) would be abolished from August 1 and extended tax exemption on essential commodities like rice and wheat in Budget 2015-16.
As regards LBT, a compensation of Rs 6,875 crore will be given to the municipal corporations, excluding Mumbai.
This was one of the main electoral promises of the BJP.
The loss of revenue would be compensated by enhancing the rate of tax under VAT which will be applicable to the whole state, Maharashtra Finance Minister Sudhir Mungantiwar told the Assembly while presenting his maiden budget in the state Legislature here.
A revenue neutral rate has been recommended considering the share of increased tax collection to be given to the areas where LBT is not levied, he said adding that extensive deliberations are required on enhancement of tax rates under VAT.

The Mumbai municipal corporation gets substantial revenue by levying octroi on crude oil. The octroi amount is collected by oil companies as part of the state specific duty from all consumes in the state. This aspect is also required to be taken into account, the minister said.

The total plan size of the state is Rs 54,999 crore and the budget estimates for 2015-16 are Rs 1,98,230.50 crore.
As per the estimates, the revenue deficit would be Rs 3,757.40 crore.
Mungantiwar, who presented a surplus budget of Rs 107.10 crore, also announced tax proposals which are estimated to result in net revenue gain of Rs 643 crore, which has been incorporated in the budget estimates of 2015-16.

He proposed a levy of 5 per cent entry tax on long steel, 12.5 per cent tax on all types of wood-free plain and pre-laminated particle boards.
He also announced extension of tax exemption on essential commodities like rice, wheat, pulses and their flour, turmeric, chillies, tamarind, jaggery, coconut, dates, Solapuri chadars and towels upto March 31, 2016.
The tax exemption on currants and raisins as well as 5 per cent tax on tea will also continue till March 31, 2016.
The Minister said that women drawing salary upto Rs 10,000 per month will not have to pay professional tax. This will benefit nearly 1.5 lakh women in the state.

He also proposed to reduce sales tax on ladies' purse and handbags from 12.5 per cent to 5 per cent.
Besides, work books, graph books, drawing books and laboratory books for students have been made tax-free.
The rate of excise duty on country liquor would now be 200 per cent of the manufacturing cost or Rs 120 per proof litre, whichever is higher.
Certain medicines required for treatment of cancer will also be exempted from tax and a list of such drugs would be notified separately.
Mungantiwar also proposed to reduce tax on guide wire required for medical treatment and LED bulbs from 12.5 per cent to 5 per cent.