Hikes taxes on cigarettes, liquor, tobacco, cosmetics & jewellery to raise funds

With large parts of Maharashtra reeling under severe drought, the state budget presented on Wednesday proposed hike in taxes on cigarette, tobacco, liquor, cosmetics and jewellery to mop up additional resources to fund relief efforts and meet the state’s development needs.

Deputy chief minister Ajit Pawar, who holds the finance portfolio, presented a Rs184.38 crore surplus budget that seeks to net an additional Rs1,150 crore through increase in taxes.

Presenting the budget proposals in the Legislative Assembly, Pawar said tax on cigarette will be raised from 20% to 25% and bidi from 5% to 12.5%. While 12.5% tax on branded tobacco sold in pouches will remain unchanged, unmanufactured tobacco, which is hitherto tax free, would be taxed at 12.5%.

“This year, some parts of the state are facing severe drought conditions. Drought relief would require huge funds. As a temporary measure, I propose to tax gold, silver, diamonds, precious materials and their jewellery at a rate of 1.10% instead of 1%,” said Pawar, while announcing that sugarcane purchase tax would also be hiked. “Both these tax proposals shall be applicable for one year only.”

If not populist, the government at least did want the budget to be less troublesome for the middle class or the lower middle class and have not imposed any kind of new taxes or increased burden in any way and has also focused on helping various community groups.

Right from increasing outlays for various schemes meant for the welfare of the minorities, backward classes and tribals to increasing the share capital of various financial
corporations meant to help the disadvantaged and backward class groups, the government intends to keep its vote bank a happy lot. For religious pilgrimage places, the state has increased the earlier limit of Rs1 crore for providing amenities in B class pilgrimage places in rural areas have been increased to Rs 2 crore.  

This is not all, an outlay of Rs501.38 crore has been proposed for construction of Tribal Ashram schools and hostels have been proposed in this budget.  Again for minority communities students and youth, various schemes such as scholarships for higher education, hostels for girls, pre-training for employment in government, semi-government and banking services and skill development for self employment are being implemented and the state has made an outlay of Rs 280 crore. Surendra Jondhale, a political analyst, said, “They might be playing with figures keeping the elections in mind. But this is being done to just to entertain and appease the potential beneficiaries of these schemes.”

The minimum rate of excise duty on IMFL has been hiked to Rs300 per proof litre from the previous Rs240, while the rate for fermented strong beer will be Rs60 per bulk litre or 200% of the manufacturing cost, whichever is higher. The duty on country liquor and export fee on IMFL exported to other states has also been increased. “Tobacco and tobacco products are injurious to health and it is necessary to curb their consumption,” said Pawar.