Commercial Taxes Department

POLICY NOTE - 2002-2003

DEMAND No.10

5.     TRENDS IN REVENUE COLLECTIONS : 

1. 5.1      During the financial year 2000 -2001, the total collections were Rs.8663.72 crores. In the financial year 2001-2002, the collections have been Rs. 8904.68 crores.  Details of revenue realised under different Acts administered by  this  Department,  for the last five years, are as follows:-

The Tamil Nadu Tax on Entry of Goods into Local Areas Act, 2001 was introduced with effect from 1.12.2001 on 6 commodities and the collection of  revenue for the period up to February 2002 under the above Act is, Rs.1841.36 lakhs 

1. 6            REVENUE AND EXPENDITURE OF THE COMMERCIAL TAXES DEPARTMENT                                                                                                                                               (Rs In Crores) 

 7.      UNIFORM FLOOR RATES OF TAXATION 

At the Conference of State Chief Ministers held at New Delhi in November 1999, it was agreed to conform to a discipline of Uniform Floor Rates of Sales Taxes. This was done as a measure of tax reform. Government of Tamil Nadu adjusted the Sales tax rates on 40 items effective from 23.1.2000, on 25 items with effect from 18.8.2001 and on 4 items with effect from 1.12.2001, to conform to the Uniform Floor Rates.

1. 
   7.2  VAT (VALUE ADDED TAX) 

As per the latest decision of the Empowered Committee of State Finance Ministers, all States should move to a VAT system on 1.4.2003. In tune with such a recommendation, the Commissionarate of Commercial Taxes of Tamil Nadu has put on the Departmental Website a "Discussion Paper" on the implementation of Value Added Tax. In addition, training is also being imparted to the officials of Commercial Taxes Department and as well as to the dealers. So far, training has been imparted to 7 Joint Commissioners, 16 Deputy Commissioners, 38 Assistant Commissioners  and 5 Commercial Tax Officers.

The Budget 2002-2003 has therefore been designed to be a preparatory stage for introduction of Value Added Tax.  VAT implies fewer commodity taxation rates, set off of tax paid at every stage or multi point value added tax.  The proposed tax rates under VAT would consist of:-

(a)    list of a few exempted items;
(b)    a few items of basic necessity for consumption and industrial inputs to be taxed at 4%,
(c)    a floor rate of 1% for bullion and jewellery   and
(d)    a Revenue Neutral Rate. 

 Items like petro products, IMFL, sugarcane are not planned to be in VAT.  However, unless the exempted items are limited, the Revenue Neutral Rate will be very high.  In this budget, to facilitate movement towards VAT, inputs purchases against Form XVII (other than fuel), spare parts, components in respect of paper industry taxed at 10%, Electric and Electronic goods taxed at 12%, machine made matches taxed at 10%, Hand made soaps taxed at 12%, Printed materials (limited to paper and ink only) taxed at 10%  have been given full set off.   Resale tax has been introduced and the 8% slab dismantled.  Exemptions in respect of certain items have been withdrawn.  

1. 8        CHANGES IN RATE OF TAXES 
1. 8.1  The tax rate is 2% on rice and wheat. (Sale through Public Distribution System is however exempted from tax)
2. * There is a 4% tax on jaggery, pepper, pulses and grams, siddha and  unani medicines, gum benzoine, instant sambrani, stitched hand-kerchiefs, renewable energy conservation devices, (other than solar cookers, municipal waste conversion devices for producing energy and energy saving Chulas), cloth rags and desiccated coconut.   
3. *        Rice, Wheat, Pulses and Grams, IMFL, Petro products, other declared goods and dealers paying compounded tax have been  excluded from payment of tax on resale.  Rice, Wheat, Kerosene, LPG, IMFL and declared goods have been exempted from Surcharge. 
4. *         Increase in rate of tax from 8% to 10% on aluminium, arecanut, cashew, cement flooring stones, dyes, inks other than writing inks, PVC pipes, tubes, fittings, printed materials, machine made matches, medicine, photo albums, rubber, sewing machines, typewriters and  timbers etc.,. 
5. *        Rice, Wheat, pulses and grams are exempted from AST. 
6. *         Increase in rate of tax from 4% to 12% on articles and equipment for gymnastics including health fitness equipments, non stick utensils and television antenna 
7. *        Tax rate increased to 12% on metallic wares other than domestic utensils, pressure and heat resistance cookware, fans, electronic finished goods, dumpers, earth moving machinery. 
8. *         Consequent to regrouping of electric and electronic goods, computers, computer peripherals, software and notified electronic items are taxed at 4%, all electric and electronic components and accessories including shunt and power capacitors are broad banded for taxation at 10% and other electrical and electronic goods are taxable at 12%. 
9. *         Inclusion of certain imported items in the Part 'G' of the First Schedule
1. 8.2  REDUCTION IN RATE OF TAX 
10. *         Reduction of tax from 8% to 4% on bamboos, bottle caps, unbranded toffees and confectionery, unbranded foods including unbranded cakes and ice-creams, cotton yarn waste, handicraft articles, jute bags which are laminated, palm fatty acid, bleach liquid, HDPE and PP woven strips and woven fabrics, umbrellas, tin containers, light roofing sheets and unregistered biscuits. 
11. *         Reduction in rate of tax from 20% to 12% on spark plugs
12. *         Rate of tax reduced from 16% to 12% on asbestos cement sheets
13. *        Rate of tax reduced from 16% to 10% on chips of all kinds branded and unregistered.

 8.3   EXEMPTION FROM PAYMENT OF TAX

*        Cotton seed husk,  neem oil cake, fish net, rubber play balloons, earlier taxed at 4%

1. *         Unbranded butter   (earlier exempt at last point of purchase)
2. *         Branded and packed fresh vegetables and fruits, earlier taxed at 12%

 8.4    The rate of tax is 24% for OPC Grade cement and PPC Grade cement, the selling prices (inclusive of tax) of which is more than Rs 145/- and Rs. 135/- respectively per bag of 50 Kg  and the tax on every sale other than first sale in  the State for the above is 5%. The rate of tax, however, continues at 16% for these Grades of cement, the selling prices (inclusive of tax) of which is not more than Rs. 145/- and Rs. 135/- respectively per bag of 50 Kg and the tax on every sale other than first sale in the State for these,  is 1%.  

9. MEASURES TO GENERATE ADDITIONAL REVENUE; 

1. 9.1   Tax on resale at 1% payable by second and subsequent sellers. The levy is applicable to all        commodities other than rice, wheat, pulses and grams, IMFL, Petroleum products and other declared goods.  No tax on resale will be levied if the turnover of a dealer does not exceed Rs.10 lakh per annum.
2. 9.2   An additional compounding slab of Rs.12,000/- per annum in respect of hotels whose turnover is  between Rs.10 lakhs to Rs.25 lakhs.
3. 9.3   Luxury tax of 1% on silk sarees if purchase value exceeds Rs.3,000/- per piece.
4. 9.4   An infrastructure surcharge of 5% on sales tax paid under the TNGST Act on all items other  than rice, wheat, kerosene, LPG, IMFL and declared goods.