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KARNATAKA BUDGET

2010-11

-CA N. Nityananda

Chartered Accountant

Economy & indicators

Depleted Revenue surplus of Rs.1151 Crores (< 1/3rd

of 2006-07 Rs.4152 Cr or 2007-08 Rs.3776 Cr)

in debts from Rs.56274 Cr in 2005-06 to

Rs.71814 Cr in 2009-10

in Fiscal deficit from 1.98% in 2005-06 to 4% in

2009-10

Tax to GDP Ratio around 15% - One of the Highest in the Country

Are we becoming a debt ridden State ?

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA

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Backdrop

Unprecedented Natural Calamities

Global Slowdown

Lack of Infrastructure

Tardy Project Implementation

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA

Tax Arrears

(Rs. in Crores)

Commercial Tax - 5138 – 30

Excise - 712 – 72

Motor Vehicle Tax - 23 – 88

Stamps & Regn - 62 – 89

Total 5937 – 79

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA

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Centre’s Allocation

13th Finance Commission

State’s share to be 32% (30.50%)

Karnataka’s share 4.33% (4.46%)

2010-11 - 9060 Cr (2009-10 – 7000 Cr)

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA

Non Loan Capital Receipts – Rs. 2903 Crores

Sale of lands

Disinvestment in State PSUs

Fiscal Deficit – 2.96% of GSDP (3.77) (09-10)

9708 Crores 11266 Crores

Fiscal Responsibility Bill – prescribes 3% cap

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA

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Total Outlay - Rs.70,063 Crores

Revenue - 53138 Crores

Capital - 16925 Crores

No Talk on - Reducing Government expenditure

- Reducing Government debts

Borrowings

Open Market - 7028 Crores (5953)

RBI - 1530 Crores (726)

GOI - 1142 Crores (1180)

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA

Agriculture given priority

Bangalore Development given a boost

Minor allocations on number of newer

areas

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA```

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5 Principles of Economic Policy

Promotion of Agriculture

Industrial Growth

Human Resource Development

Empowerment of weaker sections

Development of backward areas

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA

Luxury Taxes & Tourism

Luxury tax

For Hotel room rentals from Rs.1000 - 8% (6%)

to Rs.2000/-

For Hotel room rentals > Rs. 2000 - 12% (10%)

Tourism

Upto 5 Acres of Agricultural land in 100 selected tourist centres can be acquired for Hotels

Concessional Interest rate of 10% p.a.

VAT exemption for a period of 3 years

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA

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Stamps & Registration

New rates of Stamp Duty

Stamp duty on Shares/debenture transactions/Demat agreements decreased from Rs.200/- to Rs. 50/-

Broker notes - 0.01% with max. of Rs. 50/- (There was no upper limit)

(Including commodity exchange transactions)

For Company amalgamations, mergers, reconstructions and demergers – decreased from 5% to 3%

For Joint development agreement & GPA - 1% subject to maximum of Rs. 1.5 lakhs

Agreement to Sale – Decreased from 0.25% to 0.10% subject to maximum. of Rs. 20000/-

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA

Stamps & Registration (Contd…)

New Stamp duty on Lease (Rent) Agreements

- Based on average of one year rentals & advance

(I.e., Advance rent Deposit) - 0.5% subject to max. of

Rs.500 on residential

buildings

- 1 year to 10 years - 1% (2% exceeding

5 yrs upto 10 yrs)

- 10 years to 20 years - 2% (4%)

- 20 years to 30 years - 3% (4%)

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA

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Motor Vehicle Tax

Life time tax increased :-

New rate Old rate

2 Wheelers

- costing upto Rs.50000/- 10% 8%

- Costing > Rs.50000/- to

Rs. 1,00,000/- 12% 10%

Light goods vehicle Rs. 20000/- Rs. 1250/-

(for vehicles in use – Rs.12000/-) Lifetime per quarter

tax

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA

Education to all – upto 10th (Literacy ratio 66.64%)

(12% studying higher education)

1000 acres Industrial Estate in each district

PPP – Roads

Energy generation – 12000 MW by 3 yrs (8000 MW)

Bangalore – 18872 Crores next 3 yrs

Industries - 50000 acres to be acquired by 31-03-10

+

15246 Crores for large industries

- 12000 acres - SEZ

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA

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What we expected -

Innovation in Revenue gathering

Boost to Industrial Growth

Tightening Govt. Machinery

Cutting down Govt. Expenditure

More PPP Models

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA

Growth Rate(2004-05 to 2008-09)

Gujarat - 11.50

Bihar - 11.30

Uttarakhand - 09.31

Orissa - 11.03

Karnataka - 04.50

Inclusive Growth – Aam Admi

ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA

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Will Karnataka Continue As a State

High on Taxes

Low on Growth

?ANALYSIS OF KARNATAKA BUDGET – 2010 CA N. NITYANANDA