Delhi Budget 2016: Focus on education, transport and healthcare

NEW DELHI: The AAP government presented its second budget on Monday, slashing taxes on a range of daily use goods and services while promising to make Delhi the state with the lowest value added tax (VAT) regime in the country.As a result of tax cuts and VAT rationalisation — most of which was predicted by TOI on Sunday — Delhiites can expect sweetmeats, savouries, footwear, readymade garments, school bags and budget hotel rooms to be cheaper. The tax restructuring was a major highlight of a welfare budget focussed on "education, public transport and health".Deputy CM and finance minister Manish Sisodia's second effort can be best described as his maiden budget repackaged with the promise of better delivery. While a few goods may become costlier as a result of VAT rationalisation, the steepest hikes are likely to come in certain products. Sisodia has expanded the levy of 20% VAT to all tobacco products, which till now was restricted to certain products. "The tax will now apply to un-manufactured tobacco, tobacco products in all forms such as cigarettes (irrespective of form and length), chewing tobacco, gutka, cigars, hookah tobacco, khaini, zarda, surti, bidis etc," the deputy chief minister said.To promote public transport and environment-friendly vehicles, VAT rate on battery operated vehicles is proposed to be reduced from 12.5% to 5%.At the same time, plastic waste used for making saleable products will no longer be exempt from VAT. Certain categories of textiles and fabrics, currently exempt from VAT, will also come into the tax frame. The government has decided to levy a uniform 5% tax on all varieties of textiles and fabrics (including sarees, except khadi and handloom fabrics). There is also a proposal to do away with variable slab of 12.5% and 5% VAT on inverters and uninterrupted power supply units and fix it at 12.5%.Firmly holding up the development agenda, Sisodia took the common man through AAP's platter of subsides on power and water, e-governance initiatives such as projects linked to streamlining of public distribution of ration system and the appealing idea of public participation.From 3,000-odd mohalla sabhas for participatory budgeting to mohalla clinics for daily health needs and aam aadmi canteens for the ordinary citizen, Sisodia rebuild on Kejriwal's assertions on social justice. The government also used the budget to respond to the angst of urban Delhiites yearning for solutions to congestion, bad roads, pollution and insufficient public transport by talking of a smart city that will take shape through better road designs, two elevated BRTs and a skywalk to Qutab Minar.The highlights of this budget, however, were the tax cuts and VAT rationalisation. "Today we have started the process of what will lead us towards making Delhi the city with the lowest VAT regime in the country. We promised this in our election manifesto and we are showing the way now by focusing on better tax compliance," Kejriwal said.The budget estimates for 2016-17 put the total budget size at Rs 46,600 crore. It includes Rs 20,600 plan outlay and Rs 26,000 crore for non-plan expenditure. Last year, the budget size was Rs 41,129 crore and at the end of the current financial year the government's revised estimates put the expenditure at Rs 37,965 crore.On how the government plans to generate resources for the enhanced budget, Kerjiwal said, "The idea is to do away with many variable slabs and uniformly fix a lower slab wherever possible to ensure better compliance. Last year, we reduced VAT on timber to 5%. A year later, we find that tax collections remained robust."The proposals seek to reduce VAT on sweets and namkeen, and readymade garments costing above Rs 5,000 down from 12.5% to 5%. The budget also proposes to apply a uniform VAT rate of 5% on all footwear and school bags. VAT for watches costing above Rs 5,000 has been proposed to be reduced from 20% to 12.5%. In a bid to bring rates at a par with other states, VAT on marble is proposed to be reduced from 12.5% to 5%.The threshold limit of luxury tax is proposed to be increased. Currently hotel room rents of Rs 750 per day and above are taxed at 15%. The budget raises the ceiling to Rs 1,500 per day.