Karnataka Budget 2013-14

Highlights of Karnataka Budget Speech - 2013-2014 and amendments proposed in various Commercial Tax & Other Laws:

      Karnataka VAT Act, 2003:

Ø  Change in Tax Rates:

  • The general rate of VAT which was increased from 5 % and 14 % to 5.5 % and 14.5 % respectively, earlier, shall continue to be  applicable up to 31.07.2013 and shall be reduced to the original rates with effect from August 2013
  • VAT exemption on paddy, rice, wheat, pulses and products of rice and wheat extended for one more year from 01.04.2013
  • Taxation scheme on soya bean edible oil manufacturing unit suitably modified – details awaited
  • VAT rate reduced on the following goods to 5.5% (applicable form 01.04.2013):
-                      arecanut de-husking machine
-                      cocoa husk
-                      Refractory monolithic powder
-                      Domestic containers
-                      Footwear costing up to Rs. 200
-                      Doors and window frames and doors and window shutters made from waste plastic
-                      Air compressors and their parts including engines – included in list of capital goods
-                      On purchase of supplementary nutrition food made under integrated child development scheme for supply to children, pregnant women / nursing mothers and adolescents by anganawadi workers run by Women and  Child Welfare Development

Ø  Payment of disputed VAT & other amounts:

·         The present requirement to remit 50 % of the disputed taxes and other amounts for obtaining stay form recovery of amounts disputed in appeals reduced to      30 %.  Welcome amendment to dealers as the amounts of pre-deposit to obtain stay of recovery proceedings reduced, however, the dealers may be required to furnish sufficient security for balance 70 % of the disputed taxes and other amounts and generally Bank Guarantees are insisted as security.  

·         The current time of ten days given for payment of additional demand created on completion of assessment / re-assessments increased to thirty days from date of service of demand notice. This amendment brings in line, the time allowed to make payment of additional demand created, with the time allowed for filing first appeal under the KVAT Act and thus no recovery proceedings can be initiated within 30 days of service of the Demand Notice.  This shall be applicable for the Demand notices to be issued on or after 01.04.2013 and up to March 2013 the present provisions shall continue to apply.
            Entry Tax:

·         Registration threshold limit increased from rupees two lakhs to rupees five lakhs
      Professions Tax:
·         Provision made for filing appeal against best judgment assessment order                                                                                  
      Stamps & Registration:
·         A cap of Rs. 1.5 lakhs put on registration fee of 1 % payable on Joint Development Agreement and related Power of Attorney

Motor Vehicles Act:
·         Lifetime tax to be collected on construction equipments in one installment instead of two installments
·         Electronic payment facility for payment of taxes and fees in respect of motor vehicles

            Please note, the above is list of the amendments proposed in Commercial Tax Laws in the Karnataka Budget Speech for the year 2013-2014.  The changes proposed shall be applicable only after passing of the Acts.