KARNATAKA BUDGET 2015-16

The State budget of Karnataka for the year 2015-16 was presented by Chief Minister cum Finance Minister Siddaramaiah on 13th March,2015. Significant changes in VAT rates were announced in the Budget.

Relief to small traders is given by increasing the registration limit from Rs.7.5 lakhs to Rs.10 lakhs.VAT on Cigars, beedi has been increased & petrol and diesel will be charged at a modest rate of 1% tax.

Mobile phone chargers, footwear, industrial cables, solar panels and solar inverter are among the items that will be cheaper.

Exemption from VAT is given for the following items :

5 To promote Solar energy generation, certain Solar PV Panels & Solar Inverters would be exempted from VAT.

Reduction in VAT Rates for the following items has been provided-

1. VAT rate on Wick stoves is reduced from the present14.5% to 5.5%.

2. VAT on Mobile phone charger is reduced from 14.5% to 5.5%.

3. Reduction in VAT on M-Sand (Manufactured Sand) manufacturing machinery/equipment as well as M-sand to 5.5%.

4. VAT rate is reduced to 5.5% on Industrial Cables namely,

a. High Voltage Cable,

b. XLPE Cables,

c. Jelly Filled Cable,

d. Optical Fibre Cable and

e. PVC Cable.

5. The below mentioned items are brought within the ambit of “Notified Industrial Inputs and packing materials”

i. Pre-Sensitized Lithographic Plates used in printing industry and

ii. Packing materials like Pallets, Box Pallets and other Load Boards, Pallet Collars

Additional Resource Mobilization Measures

• VAT is enhanced from the present 17% to 20% on Cigarettes, Cigars, Gutkha and other manufactured Tobacco.

• The tax rate on Diesel and Petrol is increased by a modest 1%.

Rationalization Measures -

1. To provide for single first appeal against re-assessment for several tax periods of one Financial year.

2. To enhance the period prescribed for disposal of appeal by KAT from the existing 180 days to 365 days from the date of stay order.

3. Following Sections are amended in The Karnataka Value Added Tax Act

a) Section 10(3) of KVAT Act, 2003 à Input tax credit can be claimed for a period of five months from the month in which it has accrued.

b) Section 11 of KVAT Act, 2003à To limit the input tax credit to the extent of output tax paid on particular commodities.

4. To provide for deduction of tax at source, at applicable rate, out of the amounts payable to a dealer from whom goods are purchased by Government department or Local Authority or Local body or others.

5. At present, no time limit is prescribed under the VAT Act for granting permission for availing the Special accounting scheme. The government has proposed to bring the same under Sakala prescribing one-month time limit for the convenience of the dealers opting for such scheme.

6. E-Filing of Appeal -

It is proposed that the dealers will be enabled to file an appeal electronically against any order or proceedings affecting him under the provisions of the Karnataka Value Added Tax Act.

7. For the dealers who are claiming concessional rate of tax or exemption on the interstate sale/stock transfer are now required to produce the CST statutory forms. It is proposed to put in place a system to upload the details of such statutory forms which will be linked to the turnover declared in their returns.