India: Maharashtra Budget 2017–18

Last Updated: 23 March 2017
Article by SKP  

The Maharashtra Budget for the year 2017-2018 was presented by the Finance Minister (FM) of Maharashtra on 18 March 2017. The budget was drawn to help ease of doing business by incorporating necessary changes in the tax laws and administration to overcome the constraints in the growth of businesses and to make the provisions in the law easier for compliance.

Thoughts on Goods and Services Tax (GST)

  • The GST Council has held 12 meetings under the Chairmanship of Union Finance Minister in which important decisions pertaining to laws and administration have been taken. Some of the important decisions taken by the GST Council are as follows:
  • States are ready for the implementation of GST which is expected to be implemented from 1 July 2017.
  • Compensation Bill draft, which provides compensation to the states after the implementation of GST, has been approved.
  • For the purpose of computation of compensation, the annual growth rate of 14% on revenue for the year 2015-16 shall be considered.
  • Compensation amount shall also include Octroi in Mumbai and the Local Body Tax (LBT).
  • GST tax rates shall be 0%, 5%, 12%, 18% and 28%.
  • Transactions within 12 nautical miles from the Indian coastline will be deemed to be intra-state supplies.

Key amendments proposed in the Maharashtra Value Added Tax Act, 2002 (MVAT Act) and Maharashtra Value Added Tax Rules, 2005 (MVAT Rules) are mentioned below:

Tax rate changes for key products

Sr. no Commodity Current VAT Rate Proposed VAT Rate Increase/Decrease
1 Geo membrane for farm pond 6% 0% Decrease
2 Soil testing kit 13.5% 0% Decrease
3 Milk testing kit 13.5% 0% Decrease
4 Aviation Turbine Fuel (ATF) for flights under the Regional Connectivity Scheme 5% 1% Decrease
5 Debit/credit Card Machine for cashless transactions 13.5% 0% Decrease
6 Gas and electric incinerators 13.5% 0% Decrease
7 Indian made foreign liquor, foreign liquor and country liquor (VAT on Maximum Retail Price of the liquor) 23.08% 25.93% Increase
8 Weekly lottery INR 70,000 INR 100,000 Increase

Other tax proposals for commodities

  • VAT exemption to Amsul along with an exemption to essential commodities up to the date prior to the introduction of GST.
  • VAT exemption on Solapuri chaddar and towels continues.
  • VAT exemption on sweet corn processing industry from 1 April 2005 to 31 March 2016.
  • VAT exemption on textile processing industry from 8 April 2011 to 30 April 2012.
  • VAT exemption on yarn sizing and warping industry from 1 April 2005 to 31 March 2016.

Other key administrative amendments

  • Powers have been given to the appellate authority to remand back the ex-parte assessment orders for assessment to the assessing authority. Therefore, the power of the assessing authority to cancel ex-parte assessment orders is proposed to be repealed.
  • Along the lines of the GST Law, it is proposed to have mandatory and fixed part payment of 10% of the disputed tax with the maximum limit of INR 150 million in the case of a VAT appeal.
  • The time limit to file appeals under MVAT in the High Court against the decision of the Tribunal is 120 days. This time limit is proposed to be increased to 180 days.
  • For VAT recovery and to make the process more effective, it is proposed that for the dues of a private company, the company and the directors shall be jointly and severally liable.
  • Interest on the refund to be provided within 90 days from the date of order. This time limit is proposed to be reduced to 60 days for early grant of refund.
  • Due to certain technical problems in the automation system of the Sales Tax Department, dealers were not able to pay their taxes in time. It is proposed to empower the state government to waive the interest payable in such situations.
  • To encourage unregistered dealers under MVAT to obtain registration so that they become eligible for GST registration, a provision shall be made to exempt interest and penalty on such dealers for the unregistered period after the payment of due tax.
  • For the early disposal of appeals pending under MVAT, it is proposed to establish three more benches of the Maharashtra Sales Tax Tribunal.
  • Professional tax assessment for the unregistered period reduced from eight years to four years.
  • It is proposed to align the interest rates of professional tax with the interest rates under Value Added Tax.
  • Dealers registered under MVAT are liable to pay professional tax. To widen the scope of the professional tax, it is proposed that the service providers registered for service tax shall also be liable to enrol.
  • It is proposed to exempt the late fee of a tax payer who files the pending professional tax returns before 30 September 2017.

(Note: the aforesaid changes would be effective once the assent of the Governor of Maharashtra is received and published in the Official Gazette)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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