Tax reforms proposed in WB State Budget 2015

West Bengal Government has proposed a list of tax reforms in the Budget 2015. The measures are expected to increase compliance and simplify the process of returns and help in solving pending issues.

The State’s revenue has increased historically from Rs 21000 Crore to Rs 40,000 Crore in the current fiscal (up to January 2015). The reform measures as listed by Amit Mita, Minister of Finance, West Bengal, will increase the ease of doing businesses and provide relief to small dealers.

The reforms in the tax administration have been widely acknowledged nationally with Commercial Taxes Directorate being adjudged FIRST among all states in the CSI-Nihilent e-Governance Award, 2013-14 and National Award on e-Governance 2014-15 in ‘Excellence in Governance.’

Amit Mitra said, “These are method of incentivising people to pay taxes. If you look closely you will find that there are incentives which we have provided for people, to come within the tax net.”

Highlights of tax reforms:

  • The threshold for VAT payment has been increased from the existing Rs 5 lakh to Rs 10 lakh, which will be providing relief to 20,000 small dealers
  • The Government has introduced an attractive tax amnesty scheme (from 01/04/2015 to 31/07/2015), where unregistered dealers can register themselves under VAT and pay the past tax liabilities at a lower rate, without penalty
  • The threshold for filing CA certified audit report has been increased from a turnover of Rs 5 Crore to Rs 10 Crore; thus increasing in ease of doing business
  • Due to substantive changes in the assessment procedure and greater transparency, the number of assessments had a drop of 300% in the last 3 years from 173,588(2011-12) to 40,493(2013-14)
  • The time of VAT refunds has decreased from eight to nine months (2010-11) to just one month. The simplification in refund procedure has helped to increase the refund numbers by eight times and the quantum of refund by 14 times
  • The scope of pre-assessment refund is extended to dealers whose combined turnover of export and inter-state sales, exceeds 50% of total turnover
  • VAT registration will be granted within 24 hours of online application, made using digital signature
  • At present, Profession Tax enrolment is required for online VAT registration. The Government has proposed to integrate the online system so that a dealer can obtain both of them at a time
  • The threshold of not charging Amusement Tax has been increased for tickets with a value of  Rs 60 to Rs 100 for certain list of entertainment show

Common man, SMEs – big gainers in West Bengal Budget 2015-16

From slashing stamp duty for properties to raising VAT exemption limits, West Bengal Finance Dr Amit Mitra took every step to woo the middle class in this year’s state budget.

Dr Mitra has reduced 1% additional stamp duty on properties that are valued between Rs 30 lakh and Rs 40 lakh. The proposed stamp duty for properties in this range will be 6% instead of 7% earlier. Industry sources say it will translate into a saving of around 14% for a buyer.

A property priced at Rs 40 lakh was earlier attracting a stamp duty of Rs 2.80 lakh. But with the new rates in place, the buyer will save Rs 40 thousands, or around 14%, on the earlier stamp duty .

Jitendra Khaitan, chief managing director of Pioneer Properties and board member of National Realtors’ Association, felt that the decision would offset service tax burden on the buyer to a large extent. “A reduction in costs always sends right signals across the industry . A saving of Rs 40,000 on stamp duty will encourage buyers,“ he said.

Dr Mitra has also tried to address concerns of the small and medium business units he had spoken to at length a month before the budget.He has increased threshold limit of VAT exemption for units with turnover of Rs 5 lakh to Rs 10 lakh.According to the finance minister, around 20,000 businessmen will now go out of the VAT ambit after the new announcement. Industry experts said the small businessmen used to get reimbursements for the VAT earlier. But with the new exemption in place, they will no more have to wait till the money is reimbursed.

Respite has also been given to business units which have turnover up to Rs 5 crore. These units will not have to hire chartered accountants any more. The state department of micro, small and medium enterprises has been running campaigns for ease of doing business in Bengal for the past six years. By bringing a large chunk of MSMEs out of the compulsory appointment of chartered accountants and promoting self-assessment, the Minister has also tried to encourage the process.

The State MSME secretary said more than 10,000 new MSME units were being registered in Bengal every year. While 60 per cent of them are in the manufacturing sector, the remaining are in the service sector. While it is difficult to quantify the units by turnover, most of these units have an investment of Rs 1 crore on an average.

Dr Mitra also tried to encourage the non-cinema entertainment industry in the state by reducing amusement tax. Events such as musical concerts, magic shows and dance will now be brought under the exemption net. Dr Mitra has proposed to enhance exemption limit from Rs 60 earlier to Rs 100.

Economist Abhirup Sarkar feels that there is little room for giving relief to the middle class in West Bengal. “In Bengal, state taxes are much below the national average. Giving further relief is a challenging task for a Finance Minister. He (Dr Mitra) has tried to create some room even in that short space,“ he said.