Sunday 06 December 2020

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Economy | Finance

Sales tax hiked, protecting Goan market

 

Goan specialities like cashew nuts, cashew or coconut feni and Goan handicraft including the famous earthenware would still be cheaper, but only in Goa, and not anywhere else in the country.

The tourist state has finally fallen in line over implementing the uniform tax policy. But it has reserved its right to maintain less amount of sales tax on certain items for the benefit of local market, keeping in mind that tourism is the backbone of Goan economy.

Though Goa had initially not agreed to fully implement the uniform tax policy, warning from the centre to cut off its central financial assistance has finally compelled the state to follow the suite of other states. Two days before the deadline expired, Goa has now issued notifications raising the sales tax on several items.

It includes two crucial items, tax on which has been hiked without hesitation any more. The tax on motor vehicles would be now raised to 12 per cent, three times more than what Goa had it earlier, from 1 July. While presenting the budget, chief minister Francisco Sardinha had raised it to only 6 per cent as Goa used to earn more revenue due to mere 4 per cent, by tapping Karnataka and Maharashtra market.

The other item is aerated waters (soft drinks) for which the tax would be now 12 per cent instead of 8 per cent. Goa is considered to be having second highest per capita consumption rate in the Indian market. Similarly, tax on all kinds of soaps has also been increased from 6 to 12 per cent.

Goa's special country liquor – feni – however would still be cheaper in the local market at the rate of 8 per cent sales tax while 20 per cent would be charged outside as per the uniform tax policy guidelines. Similarly, cashew nuts and cashew kernels would be charged only 2 per cent, unlike 4 per cent outside Goa.

Goa has also exempted certain items included in the 8 per cent bracket under section 10 A of the Goa Sales Tax Act, but only for local sale. "It would help in protecting interest of local traders while also not violating the basic spirit of the uniform tax policy", says sales tax assistant commissioner Y S Pai Bir.

Among several such items, it mainly includes domestic LPG, handicraft, handloom and khadi items, country-made shoes, home-made utensils, earthenware, school bags and exercise bags as well as stationery like pens, pencils etc, locally made cakes, pastries and unpacked biscuits, manganese ore, fishing requisite, sprinkler and drip irrigation equipment, non-electronic toys, stamp paper, mangalsutra etc.

In order to give full protection of local market of betelnuts, black pepper, cardamom, coffee seeds, raw cashew nuts and coconuts, the state government has decided to restrict the sales tax only up to 3 per cent, provided it is sold through registered co-operative societies, both in the local and outside market.

In a similar manner, cushion has been provided to the raw material (except petroleum products), packing material and plant and machinery, provided it is purchased and utilised within Goa. The tax on it would be only 3 per cent, instead of 8 per cent.

The tourist state however is yet to fall in line to raise tax to 4 per cent on information technology items, in spite of deciding to raise it from zero per cent, since the neighbouring Karnataka state is still having 0.25 per cent sales tax over it. "If pressurised, we will immediately do it", says Mr Bir.


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