Karnataka Budget reduces sales tax on diesel, other sops too for auto industry

Bangalore, July 15, 2013: Following demand from truck operators in the state, the Karnataka government has reduced sales tax on diesel in its latest Budget presented for 2013-14.

In the state Budget presented on Friday (July 12), Karnataka chief minister Siddaramaiah (pictured), who also holds the finance portfolio, announced that sales tax on diesel will be reduced by 1.1 percentage point from the current 16.75 to 15.65 percent.

With this, diesel will cost around 51 paise less per litre while cutting down the state revenue by Rs 300 crore a year. Diesel is governed under the Sales Tax act in Karnataka and has been kept out of the Value Added Tax (VAT) regime.

In other notable sops to the auto industry, the Budget gave 50 percent concession on road tax for maxi cabs ferrying school children. Further, it proposes to introduce vehicle tracking and monitoring systems and passenger information system in 4,000 vehicles and 45 major bus stations of Karnataka State Road Transport Corporation (KSRTC) as part of people’s safety measures.

The government has also decided to establish a truck terminal and logistics park near Hubli and truck terminals in Raichur, Hospet, Karwar, Mangalore, Hassan and Humnabad. In addition, the Budget proposes to set up two Driver Training Centres for heavy vehicles in Mangalore and Gulbarga at a cost of Rs 30 crore.

The Budget also proposes to establish four help desks in Japan, Germany, Taiwan and the USA to attract foreign direct investment to the state. The desks, according to sources in the Commerce Industries department, will primarily help in attracting investment from the auto and component industry along with other sectors like information technology. The total size of the Budget stands at Rs 1,21,611 crore, in which the Commerce and Industries Department gets an allocation of Rs 885 crore while Home and Transportation department receives an allocation of Rs 5,315 crore.

JAISHANKAR JAYARAMIAH