Central sales tax
The Government of India has announced reduction of CST rate from the current rate of 4 per
cent to 2 per cent in the year 2003-04 as part of the CST phase out. The loss of revenue
to the State from the proposed reduction of CST would be about Rs 442 crore.
Luxury tax
Additional Resource Mobilisation Measures
I propose to: (i) levy luxury tax on telephone charges collected by hotels and lodging
houses by withdrawing the present exemption available to such charges collected. (ii) levy
luxury tax on luxuries provided in clubs as Rs 600 per annum per member.
Reliefs: I propose to increase the exemption limit in respect of Kalyana Mantapas from the
present Rs 2000 to Rs 5000 per day as a measure of relief to the poorer sections of the
society.
Profession Tax
Rationalisation Measure: Harm-onisation of rates: As recommended by the Tax Reform
Commission, I propose to harmonise the number of rate slabs in general and exemption
periods in the case of self-employed persons to make the tax more simple and equitable, as
in Annexure-V.
Entry tax
Rationalisation measures: In line with similar provisions under the Karnataka Sales Tax
Act, I propose to, (i) to fix a time limit of 90 days to the first appellate authorities
for disposal of appeals covered by stay orders. (ii) restore the stay powers to
State Appellate Tribunal to the extent of 50 per cent of the tax disputed in second
appeals and fix a time limit of 180 days for disposal of such appeals.
I propose to permit dealers to issue self-printed declarations towards pay-ment of entry
tax paid by on goods sold, instead of the present Form-40 declarations to be obtained from
the Department.
I propose to empower the Committee of Additional Commissioners set up to issue statutory
clarifications on classification of commodities, tax rates and eligibility of transactions
to tax under the Karnataka Sales Tax Act to issue similar clarifications under the Entry
Tax Act.
Entertainment Tax
Reliefs: I propose to exempt tax on sponsors of sports events. Rationalisation
Measures: I propose to levy an additional tax of Rs 1 and Rs 0.50 per admission on AC and
Non-AC theatres respectively.
As the present sales tax on lottery tickets is not generating revenue at the desired
levels, I propose to levy a more efficient betting tax on lotteries by bringing a new
enactment.
Agricultural Income Tax
I propose to continue the concessions on Agricultural Income Tax that I had announced for
the year 2002-2003 during the year 2003-04 also in view of the drought.
Consequential Amendments: The relevant tax laws need amendments to implement the above
proposed measures. These amendments together with other amendments for rationalization
will be moved.
Excise
I propose to levy excise duty on liquor supplied to Canteen Stores Department at the rate
of Rs 40 per bulk litre, instead of Rs 20 per Bulk litre levied at present.
I also propose to levy litre fee at the rate of Rs 15 per Bulk Litre on liquor costing a
basic price of Rs 351 and above per case on liquor supplied to Canteen Stores
Department.
I propose to increase the minimum basic price of liquor excluding Fenny, Beer and Wine to
Rs 350 per case for the purpose of levying Additional Excise Duty and consequently I
propose to levy a minimum Additional Excise Duty at Rs130 per Bulk litre.
In order to rationalise the fee on export of liquor, I propose to increase export duty on
Indian Made Liquor from Rs 2.50 per Bulk litre to Rs 3.50 per Bulk litre and on Beer from
50 Paise to Rs1 per Bulk litre.
I propose to levy a fee of Rs 2 per bulk litre on denatured anhydrous alcohol supplied to
oil companies for the purpose of mixing with petrol.
The above provisions will come into force with effect from April 1, 2003. On sub-leasing
of Distilleries/Breweries/ Wineries by the licensees to third parties, I propose to levy a
fee equivalent to ten percent of the licence fee on Distilleries/Breweries/ Wineries at
the time of granting permission for sub-leasing and thereafter at the time of renewal of
such licences every year.
I propose to create a special category of retail licence for Government owned companies,
with a condition that, such shops shall be exclusively maintained by them and shall not be
transferred or sub-leased to others. Consumption of liquor within the licensed premises
will not be allowed under this category of licences. The licence fee for such shops shall
be Rs One lakh per year./
I propose to levy a special fee of Rs One lakh for granting special permission to bottle
liquor in less than 180 ml capacity. I propose to reduce the fee levied on wholesale
licences issued for shops located in city municipal corporation limits with a population
of above 20 lakhs from Rs 8.25 Lakh to Rs 7.25 Lakh and in case of wholesale licences
issued for shops located in other areas from Rs 6.75 Lakh to Rs 5.75 Lakh per annum.
I also propose to reduce licence fee in respect of clubs(Cl-4) located in town municipal
council and town panchayat areas from Rs. 70,000 to Rs. 60,000 per annum and in respect of
clubs located in other rural areas from Rs.60,000 to Rs. 50,000 per annum.
At present, a licensee who is granted a licence to sell Indian Made Liquor is permitted to
sell foreign liquor (imported from outside India) on payment of an additional licence fee
equivalent to ten percent of the licence fee. It is proposed to permit the sale of foreign
liquor (imported from outside India) on payment of an additional licence fee of Rs 25,000
in case of wholesale licences (CL-1), Rs 5,000 in case of Clubs and Rs 10,000 in respect
of all other licences granted for sale of liquor under the Karnataka Excise (Sale of
Indian and Foreign Liquors) Rules, 1968.
The above provisions will come into force with effect from July 1 2003. In order to ensure
proper utilisation of rectified spirit and denatured spirit, I propose that the
requirement of rectified spirit and denatured spirit for industrial concerns and
pharmaceuticals will be supplied only through the warehouses established by Government
companies. For this purpose, Warehouse licences will be issued to such Government
companies for purchase and sale of rectified spirit and denatured spirit to industrial
concerns and pharmaceuticals in the State.
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