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Polls will deny Gujarat tax relief till 2014

When the Gujarat government gave a relief of Rs410 crore this year through a cut in value added tax and a marginal cut in electricity duty.

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Polls will deny Gujarat tax relief till 2014
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What an irony! Gujaratis are unlikely to have any relief in taxes till 2014 mainly because of elections scheduled later this year and then again the Lok Sabha polls that are to be held in 2014.

When the Gujarat government gave a relief of Rs410 crore this year through a cut in value added tax and a marginal cut in electricity duty, Gujaratis were happy that they will have to pay less as taxes in 2012-13 and 2013-14. Apparently, the state government's generosity was precipitated by the assembly elections slated for later this year.

However, the optimism of Gujaratis was short-lived. The Union Budget has announced an increase in service tax and excise duties for 2012-13, thus neutralizing the relief the state government had given.

The reverse is likely to happen in 2013-14. To keep the people in good humour till the Lok Sabha elections, the Union government may keep taxes low in the budget next year.

But the state government is unlikely to show any mercy in the matter of taxes as it will have no pressing reason to do so.  For 2012-13, Gujarat finance minister Vaju Vala announced a populist budget to give some relief in the run up to the assembly elections later next year.

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