Presenting the Rs 4,616-crore revenue deficit Budget, Chief Minister O Panneerselvam, who also holds the finance portfolio, said that VAT for mobile phones and LED lamps has been cut to five per cent from the earlier 14.5 percent.
While mosquito nets of all kinds will be exempted from the present five per cent VAT, the Budget proposed to withdraw electricity tax on plants using biomass (excluding bagasse) to give a boost to green energy products.
In a move to make manufacturing industries competitive, the Budget decided to withdraw the input tax credit reversal imposed on the inter-state sale of goods which was introduced in November 11, 2013.
Fishing nets have been exempted from VAT, while the tax on cardamom would be reduced to 2 percent from 5 percent.
"VAT on LED lamps of all kinds will be reduced from present levy of 14.5 percent to 5 percent," Panneerselvam said.
"The tax concessions will result in loss to the exchequer to the extent of Rs 650 crore per annum," he said.
He said the state had to rely more on its own strength, besides the slow growth in States' Own Tax Revenue (SOTR), while devolution and grants in aid from the Centre are expected to go down.
"Notwithstanding this increased financial burden and the slow growth in SOTR, our government has decided not to impose any new tax," he said.
On devolution of central taxes and grants-in-aid from the Centre, Panneerselvam said major changes have been brought, based on the recommendations of the 14th Finance Commission.
He said the state would lose an estimated Rs 35,484 crore in the next five years due to these changes and sought compensation out of the allocation earmarked for the NITI Aayog, which has replaced the Planning Commission.
The state government would be burdened with a "heavy responsibility" of providing additional share in centrally-sponsored schemes from its own resources without getting adequate increased resource flow from the Centre, he added.

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