The Maharashtra government proposed to exempt value added tax (VAT) on aircraft spares to generate employment opportunities for skilled technicians.

"Air traffic is growing rapidly in India. However, there are no indigenous facilities for maintenance, repairs and overhaul (MRO) of aircraft," Maharashtra Deputy Chief Minister and Finance Minister Ajit Pawar said, while presenting the state budget in the legislative assembly.

"Airlines send aircraft to foreign countries for maintenance, repairs and maintenance. I propose to exempt VAT on aircraft spares so that Multimodal International Cargo Hub at Nagpur (MIHAN) type projects can be started to employ skilled technicians. I hope this will propel industries in the Vidarbha region and create new employment opportunities," Pawar said.

"The film industry is a major source of employment in Maharashtra. Considering this, the sale or lease of copyrights of films for exhibition in theatres was exempted from May 2011. The government has also decided to exempt sale of copyrights for the earlier period -- from April 2005 to April 2011. I propose to amend the Maharashtra Value Added Tax (MVAT) Act accordingly," he said.

"Poha (beaten rice) and churmure (puffed rice) are tax free, but roasted gram and dalwa (beaten wheat) is taxable at five per cent. I propose to exempt it from tax," he said.

Some notified capital goods sold within the state to railways, defence and space departments are taxed at 5 per cent. However, the general rate of tax on capital goods is 12.5 per cent. Thus inter-state sales of capital goods to government departments is taxable at 12.5 per cent, he said.

Several states have reduced the rate of tax on capital goods to 5 per cent which enables manufacturers from these states to sell goods to government departments at 5 per cent both within and outside the state. However, manufacturers in Maharashtra are liable for 12.5 per cent tax on such sales, which renders them non-competitive, he said.