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VAT growth rate goes north
Chandigarh, May 07, 2008: Haryana leads the way in the North as far as annual growth in
value added tax (VAT) collection is concerned. Even otherwise, Haryana stands a
respectable number three in the entire country as far as growth in the resources
collected from VAT is concerned.
According to the latest national figures available, Andhra Pradesh, with a high
growth rate of 24 per cent, is number one in the country as far as VAT
collection growth for the year 2007-08 is concerned, while Bihar stands at number two with 23 per cent growth in VAT collection over the previous
year. Haryana, with 20 per cent growth in VAT collection for the previous financial
year just ended, stands third. Compared to the growth of 20 per cent of VAT collection of Haryana, other states
lagging behind were Gujarat with 17.5 per cent, Rajasthan with 17 per cent,
Delhi 15.7 per cent, Maharashtra 15 per cent, Punjab and West Bengal with 14 per
cent each. Uttar Pradesh with 8 per cent growth and Tamil Nadu with a mere 3 per
cent were at the bottom of the table, said sources.
“The first state in the country to introduce VAT in 2003-04, Haryana has been
achieving double figure growth in VAT collection rate every year. So well has
the state done that for the last five years, it has always touched the 20 per
cent growth mark every year,’’ Haryana Excise and Taxation Commissioner Arun Kumar said.
“Haryana is already the number one state in the country as far as per capita
investment is concerned. It is fast heading towards becoming a state with
fastest growth rate of VAT collection per year,’’ adds Arun Kumar.
Source: ExpressIndia
No VAT on unstitched clothing in Punjab
Patiala/Ludhiana, April 23, 2008 : Punjab Chief Minister Parkash Singh Badal, who met a delegation of cloth traders
and merchants from the state, announced that no VAT would be imposed on unstitched cloth and other women’s
clothing. Punjab Chief Minister Parkash Singh Badal made this announcement in the presence of Industries Minister
Manoranjan Kalia and Excise and Taxation Commissioner A. Venu Prasad. More than 100 persons had gone to meet CM along with Kalia and Anil Joshi, BJP
MLA from Amritsar, Bhupinder Gupta, president of North India Retail Merchants’
Association, said.
The Punjab Excise and Taxation Department had started imposing 4 per cent VAT on
unstitched cloth in the wake of a recent judgment by the Punjab VAT Tribunal.
The traders had been opposing the move and many truckloads of unfinished dress
material were held up at various entry points in the state.
Maharashtra may slash VAT on ATF in Mumbai, Pune
April 22, 2008: The Maharashtra government is now considering reducing the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 25 per cent to four per cent in Mumbai and Pune. This development comes close on the heels after the Ministry of Civil Aviation
(MoCA) dashed a letter to Maharashtra's Chief Minister,
Vilasrao Deshmukh, requesting the inclusion of Mumbai and Pune airports for benefits of reduction of VAT on ATF in rest of the state. Maharashtra's Finance Minister, Jayant Patil had reduced tax on ATF from 25 per cent to 4 per cent, while presenting the Budget (fiscal year 2008-09), however, Mumbai and Pune were not included. We are now considering reducing VAT on ATF by 21 per cent i.e. from 25 per cent to four per cent for Mumbai and Pune Airports. The Revenue department has already forwarded the proposal to the state Finance Minister to consider it and thereby table the proposal in the next cabinet meeting.
Source: My Yahoo
Foreign Trade Policy, promises remain
unfulfilled
New Delhi, Apr 9, 2008 The annual supplement of the foreign trade policy (FTP)
2004-09, to be announced by commerce and industry minister Kamal Nath on April
11. But an announcement made at the beginning of the series regarding setting up of the
Inter State Trade Council has not yet resolved. The Council was envisaged as an institutionalised dialogue mechanism between the Centre and the
states to make sure that all the export-friendly measures taken by the Centre
are implemented smoothly across the country. Operationalising such an institutional mechanism could have helped since states
are in charge of VAT refunds for exports and in awarding exemption from some
state levies. The Council could have solved several obstacles faced by exporters
proper implementation of the single-window clearance mechanism of the Special
Economic Zones Act as well as labour reforms and treating export units as
essential services to thwart flash strikes by workers. Pointing out the
inordinate delays in VAT refunds, exporters have demanded that discussions on
awarding them exemption from VAT also could have happened through such a
Council.
States need to abolish VAT on edible oils to check prices
Ahmedabad, April 4, 2008 (IANS): States need to abolish value-added tax (VAT) on edible
oils to control the spiralling prices, according to Solvent Extractors
Association of India (SEAI). The centre has done its bit in regard to VAT. Now
the states must abolish VAT so that the edible oil price rise could be kept
under check, B.V. Mehta, secretary of SEAI, told IANS. The SEAI, in its pre-budget memorandum to union Finance Minister P. Chidambaram
said: It is observed that there are differences in the percentage rates and
rules from state to state under VAT for oilseeds, oilcakes and oils.
The prevailing high rate of tax with its cascading effect makes it difficult
for the indigenous oilseeds sector to face the challenges of globalisation. The
state finance ministers may be requested to place oilseeds, oilcake, rice bran
and their derivatives in the category of one percent VAT, it added. The SEAI also sought that an oilseeds and oil development fund be created by
imposing development cess on imported edible oils. According to the association, a comprehensive package of fiscal measures can be
evolved to finance programmes aimed at increasing oilseeds production to meet
the rising demand for edible oil.
Conditional funding of schemes
April 1, 2008: The Communist Party of India (Marxist) has accused the Centre of imposing a neo-liberal
conditionality to the transfer of funds under the centrally-sponsored schemes. The party has said the Centre
was vitiating the spirit of federalism by attaching conditions to funds given to states for implementation of social sector schemes.
It is the right of taxpayers to know how their money is being spent. One of the biggest challenges before the government today is to ensure efficient spending. And to this end certain
conditionality within the existing federal framework are totally justified. In fact, if anything, the Centre has been far more cooperative and accommodative over the past decade, especially after coalition politics took firmer roots. The NDA regime had started the process of
Centre-state co-operation in the implementation of VAT. The UPA government implemented VAT and the result is there for all to see.
The states fiscal position that of revenue surplus on a consolidated basis is largely due to the boom in tax collections after VAT was put in place. The
Center's gesture of rescheduling the long-term debt owed by states and the waiver of interest payment based on performance has also helped the latter come out of the
woods.
Source: The Economic Times
West Bengal to amend VAT rules by April
Kolkata, Mar 27 The state will amend the West Bengal Value Added Tax (VAT) rules
by April to rejig the refund mechanism as proposed by the state finance
minister, Asim Dasgupta, in his 2008-09 budget. HK Dwivedi, commercial tax commissioner, said the process involved in refunding
VAT to the exporters is cumbersome at present, as the department has to cross
check whether the VAT, for which the exporter has sought refund, has gone to the
treasury or not.
"In fact refunding is also a trouble at the government of India level, and it is
not only West Bengal, which has backlogs in refunding," Dwivedi said. Although Dwivedi did not say the amount lying as backlog, he said by the end of
2007-08, the commercial tax department will be refunding Rs 50 crore against Rs
30 crore in 2006-07. However, this is expected to increase in 2008-09 once the VAT rules are amended,
Dwivedi said on the sidelines of an interactive session, organised by the Bengal
National Chambers of Commerce & Industry.
The state finance minister proposed in his Budget that the government will be
refunding to the exporters 50% of the VAT paid on the basis of book value within
one month of the claim filed. The rest 50% will be refunded after proper
verification. KK Navada, president of BNCCI, said the proposed changes in the VAT rules is a
welcome step, but industry will like to get more simple VAT returns forms,
preferably sector-specific.
Source: Financial Express
Maharashtra slashes VAT on Aviation Turbine Fuel
Mumbai, March 24, 2008: Spurred by the recent announcements by Andhra Pradesh and Kerala
governments, Maharashtra government has slashed the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF). VAT on ATF in the state has been reduced from 25 per cent to four per cent. This has delighted the Low Cost Carriers
(LCCs), planning to start operations in tier-II and tier-III cities in the state. However, the ATF reduction will not be applicable for airports in Mumbai and Pune.
An announcement pertaining to the reduction of VAT on ATF was made by Maharashtra’s Finance Minister, Jayant Patil, while presenting the State Budget (fiscal year 2008-09) last week. Although the reduction of ATF charges will benefit LCCs and the regional airlines, it will also help
other cities to connect with metros and major cities across the country. Domestic airlines have welcomed the state government’s decision to reduce VAT on ATF.
Rajasthan Govt stops work on Cairn pipeline
for VAT loss
New Delhi, March 21, 2008 (PTI): Cairn India's efforts to raise the nation's crude oil output has hit another roadblock with the Rajasthan Government stopping work on a pipeline needed to transport the precious commodity to refiners saying it would result in loss of tax revenues to the state.
Though Rajasthan is not opposed to crude oil being taken to refineries outside the state for processing, it fears loss of sales tax, in the form of VAT, revenues if the delivery point of the output from Cairn's Barmer fields is shifted.
The state government has stopped work on giving right of user (RoU) for the pipeline being built to transport the oil to Gujarat coast, official sources said. Cairn has sought shifting of the delivery point so that the 585-km
pipeline needed for transporting the crude to Gujarat coast can be included in the cost for developing the oil
field and recovered from the sale of oil.
Industry body for 8 pct uniform tax on retail fuels
NEW DELHI, March 15, 2008 (Reuters): States should levy an uniform 8 percent
value-added tax on retail fuels instead of the sales taxes to offset the impact
of high global oil prices on consumers and help state-run firms cut losses, an
industry body said on Friday. Indian policymakers are concerned over the rise in crude oil prices, which was
at $109.86 a barrel in the U.S., as it stoke inflation and widen trade deficit.
India, which imports 70 percent of the fuel it consumes, raised retail fuel
prices last month. A multitude of central and state taxes keep retail prices
high.
The Associated Chambers of Commerce and Industry said that although sales tax
has been abolished for most products, states continue to subject oil companies
to sales tax. Sales tax varies from 33 per cent to 18.9 percent in case of petrol, and 34
percent to 8.23 percent for diesel. Therefore it is suggested that a uniform VAT of 8 percent be levied on petrol
and diesel so that oil companies are able to stand the burden of rising crude
oil prices," it said. The chamber also said government should gradually phase out subsidies extended
to sectors like food, fertilizer and petroleum.
Source: Reuters
Minister asks biscuit industry to talk to states on VAT reduction
NEW DELHI, March 13, 2008: The biscuit industry should approach state governments for bringing down the value-added tax (VAT) from the current level of 12.5 per cent, Minister of State for Food Processing Industries Subodh Kant Sahai said. Inaugurating a seminar organised by the Indian Biscuits Manufacturers Association (IBMA) here today, Sahai said the VAT on any processed food items, including biscuit should be between 0-4 per cent range.
"The industry should try to talk to the state governments and give them the logic behind the demand of reducing the VAT rate," the Minister said. Earlier, IBMA President B P Agrawal said biscuit has been kept in the same basket as cigarettes and pan masala, and demanded that VAT should be brought down to four per cent. The association is celebrating 'biscuit day' today. Sahai highlighted that the Centre has abolished excise duty on biscuits that are sold to consumers within Rs 100 per kg and assured the industry all the help from the ministry. APEDA General Manager Pravin Gupta said it would focus on promoting biscuit export and asked the industry to suggest measures to increase the volume.
Soure: The Economic Times
Gogoi presents Rs 2,819-cr deficit Budget
GUWAHATI, March 10, 2008: Chief Minister Tarun Gogoi, today placed before the State Assembly a deficit Budget of Rs 2,819.23 crore. In budget he
proposed
* VAT on rice, pulses, atta, maida, suji, besan, onion and potato to be abolished.
* VAT on jute cloth, other jute products soya nuggets and transformers from 12.5 per cent to 4 per cent.
* Tax on foreign liquor and country spirit from 24 per cent to 27 per cent.
* A cess at rate of 3 per cent on sale of tobacco products.
* 4 per cent VAT on sports goods. Footballs and volleyballs to be exempted.
* Entertainment tax on DTH connections at the rate of Rs 25 per connection per month.
* Cess at the rate of 20 paise per kilogram of green leaf purchased by the bought-leaf factories.
UP
imposes four percent tax on kids' workbooks
LUCKNOW, March 09, 2008: Under the Value Added Tax (VAT) regime,
the Uttar Pradesh state has clubbed students workbooks with copies instead of
books in the new academic session, beginning April, inviting a four per cent tax. “All education systems in India and abroad are becoming more and more interactive thus making workbooks an indispensable part of the curriculum,” said SC
Sethi, president of Federation of Indian Publishers and Booksellers Association. UP is the only state that has imposed tax on
workbooks, he added.
Glass units suffer as tariffs revised third time
New Delhi/ Agra March 06, 2008: Already struggling to keep up with their production demands amid frequent strikes by workers, the Firozabad glass units have been dealt another blow by the Gas Authority of India Ltd (GAIL) by revising its CNG tariff for the third time since last year forcing the shutdown of over thirty per cent of the glass-blowing units in the town.
According to industry sources, the prices for overdrawn gas, which used to be Rs 6.50 per cubic metre (pcm), had been revised to Rs 12.50 pcm in December last year. Now the rate has further been revised to about Rs 33 pcm with effect from February 20. Production rates of major glass-blowing units of Firozabad have since gone down by 80 per cent.
The state government too has levied a 20 per cent value-added tax (VAT) on CNG in place of the 4 per cent
trade tax which was applicable till now, raising concerned voices among the industrialists of this glass town.
Source: Business Standard
The excise duty on non-filter cigarettes increased nearly five times
MUMBAI, March 04, 2008: The excise duty on non-filter cigarettes, which do not exceed 60 mm in length, was increased nearly five times to 82 paise per stick from the earlier 17 paise per stick in the budget for 2008-09. Shares of ITC and Godfrey Phillips India were badly hit after the finance minister proposed an increase in cigarette taxes, forcing brokerages to downgrade the stocks.
The steep hike in the excise duty on non-filter cigarettes will have a negative impact on non-filter cigarette volumes of the cigarette industry. ITC would be best placed in the cigarette industry as non-filter cigarettes constitute less than 18 per cent of the company volumes.
5% duty on Naphtha may make plastic goods costlier
Kolkata, February 3, 2008 : Indian
Plastic Federation (IPF) said that the prices of plastic goods are
likely to go up 5-10% in the next year following the FM's announcement
of reintroducing 5% import duty on naphtha in the Budget. The
move has prompted Reliance Industries to increase polymer prices Rs.
2-3 per kg.
Four new services under tax net
NEW DELHI, March 01, 2008: Finance Minister P. Chidambaram sought to bring in four new services under the tax net to garner higher revenues while keeping the rates unchanged at 12 per cent for 2008-09. The new services included for taxation are stock and commodity exchanges and clearing houses, asset management firms offering unit-linked insurance plan
(ULIP) to bring them on a par with similar service providers for mutual funds and customised software to put them on a par with packaged software and other IT services. The fourth category is “the right to use goods, in cases where VAT in not payable.”
Alongside, to provide relief to the small service providers, he proposed to enhance the threshold limit of tax exemption from the current level of
Rs. 8 lakh to Rs 10 lakh. “As a result, about 65,000 small service providers will go out of the tax net.”
The Minister went on to clarify that certain other categories of service providers such as money changers, persons running games of chance and tour operators using contract carriage vehicles were liable to pay service tax. Accordingly, purchase or sale of foreign currency, including money changing by an authorised dealer or an authorised money changer under banking and other financial service would be under the service tax net.
The new services and changes are to be effective from a date to be notified after enactment of the Finance Bill 2008. With the inclusion of these four new services for taxation purposes, the government has estimated a collection of
Rs. 64,460 crore in 2008-09.
Source: The Hindu
Liquor prices to go up in Punjab
CHANDIGARH, February 28, 2008: The new liquor policy approved by the Punjab cabinet here on
Wednesday would see a hike in prices of both PML (Punjab medium liquor) and IMFL (Indian made foreign liquor) go up marginally, besides a hike in VAT up to 12.5% from five% earlier. A PML bottle in Punjab would now be costlier by Rs five while the IMFL bottle would go up by Rs 10, a government spokesman revealed. VAT on molasses would be decreased from 22% to four % in order to avoid losses to Punjab based sugar mills, on account of purchase of molasses from outside.
The new excise policy of 2008-09, which is a continuation of the old policy where licensing units would be allotted by draw-of-lots, would see additional revenue generation of Rs 72
crore, and the total revenue generation would be approximately by Rs 1,728
crore. Although, the number of vends would remain almost the same as the previous year, the cabinet has approved to increase the quota of PML by 3% while effecting no hike in the quota of
IMFL. With this, the quota for the year 2008-09
would be 618 lakh PL for PML and 325 lakh PLs for IMFL.
Source: Times of India
Assocham: remove value added tax (VAT) and service tax on film
Industry
New Delhi, February 22, 2008: Move the film industry to the Concurrent list from State List, enact
Optic Disc Law, remove value added tax (VAT) and service tax and confer a
de-facto industry status on it are some of key proposals mooted by The
Associated Chambers of Commerce and Industry of India (Assocham) for the
government’s considerations in budget 2008-09.
In a memorandum submitted to the I&B and Finance Ministries, Assocham president
Venugopal N. Dhoot proposed immediate enactment of Optic Disc Law to combat
increasing video, cable and TV piracy and amend the existing Copy Right Act
which does not adequately prevent piracy both in print and electronic media.
Father of VAT` dies
New Delhi February 21, 2008: Eminent economist and scholar of public finance, Amaresh
Bagchi, died today. He was 77. He is survived by wife, a son and daughter and three grand-children. Bagchi has written extensively on public finance, in particular on tax policy, tax administration and fiscal federalism. His 1993 report on “reform of consumption taxes in India”
kick started discussion about the introduction of value-added tax (VAT) at the state level. The current idea for a goods and services tax
(GST) is also said to have originated from the same report.
Bagchi was currently serving as a member in the Commission on Centre State Relations and as an
Emeritus Professor at the National Institute of Public Finance and Policy (NIPFP), New Delhi.He also served in the finance ministry as officer on special duty
(OSD) with responsibilities of economic adviser. Later,
Bagchi was appointed as a member in the Eleventh Finance Commission and subsequently served as a member in the Prime Minister’s Economic Advisory Council.
Source: Business Standard
Durable makers for lower indirect taxes
New Delhi February 19, 2008: The consumer durables industry has asked for lower indirect taxes and cut in Customs duty on inputs in the forthcoming Budget, as it seeks to safeguard its profitability against any increase in cheaper imports of finished goods. The industry has called for reduction in value-added tax (VAT), abolition of central sales tax and cut in excise duty.
“In 2007, all categories recorded a double-digit growth. This year, we expect reduction in VAT and
incentives to bring the sector at par with the IT industry. Even reduction in import and excise duty will help in fetching better margins and provide products to the consumers at a cheaper rate,” Haier India Director Pranay Dhabai said. The industry has asked the government that non-IT products like consumer electronics and entertainment should be treated at par with the IT industry regarding indirect taxes.
Industry players have sought incentives for the electronic hardware sector. “The difference between IT and non-IT products is getting blurred, as one can view the TV programmes on personal computer and mobile phone. Therefore, it is requested that IT and non-IT products be treated at par with regards to indirect taxes,” Mirc Electronics Chairman and Managing Director G L Mirchandani said.
Source: Business Standard
Fertiliser firms seek duty cut on fuel, inputs
Mumbai, Feburary 18, 2008: Fertiliser manufacturers have sought removal
of basic customs duty on liquefied natural gas-- used as feedstock-- as well as
on inputs like ammonia, phosphoric acid and sulphur, in order to reduce cost of
production. Removal of the 5 percent customs duty on the feedstock/inputs in the 2008/09
Budget will also help reduce the government's subsidy burden, an industry body
said.
The industry body has also sought fiscal incentives in order to attract fresh
investment in domestic fertiliser capacity, in the form of a 15-year tax
holiday, and exemption for fertilisers and inputs from the value added tax (VAT)
charged by states. The last major urea domestic capacity addition of 775,000 tonnes was in 1999.
The industry body said that demand-supply gap is likely to jump to 16 million
tonnes by 2012, from 10 million tonnes now.
Source: Reuters
Double taxation and multiple levies hampering growth
February 14, 2008: The telecom industry is overburdened with taxes. The industry is undergoing a
rapid change and dealing with multifarious taxes and levies is cumbersome. The
domestic telecom industry ends up paying a significant share of their total
revenues towards different levies, compared with their counterparts in other
Asian countries.
The two biggest issues surrounding the industry are of double taxation and
existence of multiple levies which are hampering the growth of the industry.
Both service tax and VAT are consumption taxes which are borne by the end
consumers. Ostensibly, these taxes are intended to operate on a mutually
exclusive basis. However, the problem is that there are no clear cut definitions
in law of what constitute either ‘goods’ or ‘services’. Equally, there are no
overriding principles which can be applied in order to come to a determination
on the point. Thus, it is entirely possible that what is a ‘service’ under
service tax law is equally ‘goods’ under VAT law. Consequently, because of this
lack of mutual exclusivity in terms of the underlying definitions of goods and
services in the respective laws, a particular transaction can possibly be
charged to both the service tax, as provision of services, as also the
VAT, as a supply of goods.
Source: Indian Express
Reduce
multiple levies on local pharma: Assocham
February 12, 2008: Dr. GSK Velu, President, AMDSI and Head of Manufacturing Sub-Committee,
Assocham and CII said the multiple levies on manufacturers and increased customs duty
makes domestic manufacturing costly. He expects the government to remove anomalies in customs duties and to exempt
excise duties and VAT on domestic manufactured goods. Capital grants and
subsidies for this industry should be provided, stated Velu. According to him, with the
right kind of incentives from the government, the nascent Indian medical technology industry can grow by leaps and bounds.
Source : moneycontrol.com
Move to hike VAT on oilseeds draws flak
HYDERABAD, February 02, 2008: The Centre’s advice to states to hike the floor rate of VAT from 4 per cent to 5 per cent to offset any revenue loss they may incur due to reduction in Central sales tax from 3 per cent to 2 per cent, has invited criticism from many quarters. The Solvent Extractors’ Association of India (SEAI) has opposed the reported move of the Union government.
Ashok Sethia, president of SEAI, and Sushil Goenka, secretary, said at a press meet in Vijayawada that at present the states were imposing 4 per cent VAT on oilseeds and the derivatives. They said 4 per cent itself is too high, as the previous rates were only one or two per cent. They said the VAT on oilseeds should either be abolished or reduced to one per cent.
Source: Commodity Online
Gems
and jewellery units in SEZ
MUMBAI, February 02, 2008: Gems and jewellery, which operates in special economic zones in India, has petitioned the government to immediately address issues of tax refunds, withdrawal of customs duty
exemption on Indian jewellery in USA under the GSP program, increasing cost of diamonds, gold and severe competition from China, which are posing a severe threat to these units in India.
Bhavesh Shah, secretary Gems & Jewellery Manufacturers Association, said that the sectors' exports to the US in the first nine months of this fiscal had fallen from $ 1669 million to $ 1511. Shah said that the blockage of huge money with Government departments by way of VAT refund, is causing serious hardship, specially to those units which are not entitled to avail set-off facility for VAT refund against VAT liability due to exporting of their entire production.
Shah said "The industry employs nearly 5 lakh people and if the
stake holders are constrained without government support, then many will be forced to shift to other
regions"
Centre may partner states in ATF relief
NEW DELHI, January 29, 2008: The Centre is working out a compensation package for states to reduce sales tax on aviation turbine fuel
(ATF) to 10% or 15%, which will help domestic carriers like Air India and Jet Airways bring down their operating cost. The finance ministry is considering compensating states for their revenue loss until jet fuel comes under the VAT regime. As of now, many states levy VAT of more than 20% on jet fuel.
The move may not result in lower fares for passengers as airlines are keen to improve their bottom line. Jet fuel accounts for about 40% of the operating costs of airlines. “States will suffer a revenue loss if jet fuel is given ‘declared goods’ status, thereby attracting a uniform 4% sales tax across the country. We have hence proposed to levy an intermediate sales tax rate ranging between 10% and 15%. This will serve twin purposes of minimising revenue losses incurred by states and help airlines reduce operating cost,” a civil aviation ministry official told ET.
“The finance ministry may consider compensating the states for their losses for at least the next two
years, after which the new VAT regime will replace the existing system,” he added. According to an estimate, a reduction in tax to 10% or 15% will lead to states losing nearly 35% to 50% of their sales tax revenue on jet fuel, which constitutes about 2% of their total sales tax revenue.
Source: Economic Times
Cable TV industry seeks rationalisation of taxes
Kolkata, January 22, 2008 (PTI): The cable TV industry has sought rationalisation of taxes on par with the IT and telecom sectors. Cable TV Equipment Traders and Manufacturers Association
(CTMA) Secretary K K Binani told reporters here on Tuesday that apart from import and excise duties, VAT on capital equipment used by the trade was 12 per cent.
He said this should be brought down to four per cent. Binani said if VAT was lowered, then consumers
would benefit by way of lower rates charged from them on a monthly basis. He said it was long overdue and the government should also grant industry status to the trade.
Binani said Telecom Regulatory Authority of India (TRAI), in its consultation paper, suggested that the cable TV industry should be treated at par with the telecom and IT industries.
Meanwhile, the association would organise the Cable TV Show 2008, in he city here from January 28-30, to showcase the various arena the cable TV industry has entered such
as broadband, data, audio video and telephony.
Urban bodies may be allowed share in VAT
MUMBAI, January 15, 2008: Urban local bodies could do away with octroi and instead be given a share in the Value Added Tax imposed by the state government, a research paper on municipal finance prepared by the Reserve Bank of India said. "The search for a substitute for octroi may perhaps end with a
formulae- ased share for the ULBs in the Value Added Tax," the paper said on Monday.
The study, prepared by Department of Economic Analysis and Policy in RBI, said the size of the municipal fiscal sector in India is very small compared to many developed and developing countries. It said municipal finances need to be strengthened and suggested a host of levies like vacant land tax, taxation of central and state government properties, motor vehicle tax or a share from the same, betterment levy, a surcharge on
stamp duty on registration deed, advertisement tax be considered as part of the scheme of revenue
assignment to ULBs.
Source: Economic Times
Will Finance Minister lower the tax burden
January 11, 2008: The pre-budget wish list of corporate honchos, who met the Finance Minister P
Chidambaram on Tuesday, was a predictable one -- lower the tax burden on companies and individuals. India Inc hopes the government will yield as direct revenues have been buoyant so far this fiscal. The extra
revenues could provide the cushion to absorb any revenue losses, in the short run. Economists though have a contrary view as they reckon populist moves could impact the government's balance sheet.
With parliamentary polls just two summers away, will the finance minister P Chidambaram unveil his second dream budget in 2008-09? Or will he wait till next year to unleash more reforms, atleast in indirect taxes?
Fact is taxpayers had more money in their pockets after Chidam-baram's first dream budget in 1997-98. He slashed income-tax rates, abolished the surcharge on corporate tax and lowered the corporate tax rate. The FM also cut the peak customs duty to make imports cheaper and restructured the excise duties to benefit the consumer.
These policy reform measures were expected "to improve compliance, add momentum to the growth
process, create multiplier beneficial effects and attract more foreign investment". Successive government's carried forward many of the tax reform measures. A reality check a decade later shows that the economy is
growing at a scorching pace - India's GDP is expected to inch closer to 9 percent this fiscal. Direct tax revenues have grown by 40% so far this fiscal due to better compliance. Cumulative FDI inflows topped $83 billion till June 2007. Clearly, the Indian economy has moved to a high growth trajectory.
Source: Economic Times
AHAR is still fighting against the VAT imposition at 12.5 per
cent
Mumbai, January 08, 2008 : The 28th Annual General Body Meeting of Indian Hotel & Restaurant
Association was recently held in the city. Inaugurated by president, Chandrahas K
Shetty, the 'Restaurant Business' exhibition of AHAR comprised more than 40 stalls. Speaking on the occasion Chandrahas K Shetty said that the membership of AHAR had increased multifold. "AHAR is putting in efforts to fight the injustice meted to the hotel industry by various statutory authorities. AHAR is still fighting against the VAT imposition at 12.5 per cent, as compared to other neighbouring states which have 4 per cent VAT; outdated excise and police rules and inobitent increase in trade refusal charges of
MCGM. The president also advised the members to work within the limit of the law and be innovative in their business plans so as to be in-sync with the ever-changing hotel scenerio and thereby be prepared for any future challenge.
The Reserve Bank
of India suggests a two-tier structure for GST
New Delhi, January 06, 2008 (PTI): The Reserve Bank has suggested a two-tier structure for the Goods and Services Tax (GST) which is slated to come into effect from April 1, 2010. "From the administrative angle, there are supports for a two-tier structure of GST involving central and state governments... use of both the Centre and state machineries in the implementation of GST would be ideal," the Reserve Bank of India (RBI) said in its annual report on state finances for 2007-08.
Based on the success of VAT, the government has decided to introduce GST for all goods and services. "Centralisation of sales taxation is not essential.... and central and state taxes can exist side by side," said the apex bank. The RBI suggested that a system of concurrent taxation consisting of a state GST (SGST) and a central GST (CGST) would be a viable medium-term option. GST is a multi-stage consumption tax imposed on a broad range of goods and services. It is a tax on transactions and end-customers who
consume the goods or services bear the final cost of the tax. However, the report also pointed out that the component of tax rates of central and the state GST is still to be determined.
Reasoning out its claim that there is administrative support for the two-tier system, RBI said, "the Centre's administrative capacity vests with the central excise department whereas the state's have a larger capacity in the form of states' sales tax establishment." The RBI report on states finances talks of various models for GST collection like collection at federal level and sub-national level but goes on to suggest dual level
collection as the best suited for the country.
The idea for the GST system was floated by Finance Minister P Chidamabram in 2005 when the value added tax (VAT) was introduced. The finance ministry with an aim to move towards a national level goods and services tax (GST) that should be shared between the Centre and the states has proposed April 1, 2010 as the date for introducing
GST. While a decision on the GST model to be adopted still needs a lot of deliberation, the Kelkar Committee has already suggested a 20 per cent combined GST rate.
- PTI
Builders seek cut in cement prices
CHENNAI, January 03, 2008: It will not be possible to implement the mega infrastructure projects envisaged in the 11th Five Year Plan period within the budgeted cost, unless the government takes steps to control the
spiraling prices of cement, steel, bitumen and diesel, warned the Builders Association of India. More than Rs.15 lakh crore infrastructure expenditure is envisaged in the Plan, of which half will go to the construction sector, according to BAI trustee R. Radhakrishnan. “Fifty per cent of that cost will go toward these four
items. If they really want to achieve it, the government must contain the rates,” he said.
“The government needs to ban the export of steel until the needs of the domestic sector have been met,” said Mr. Radhakrishnan, pointing out that 30 per cent of Indian steel was exported, even while Indian steel consumers were faced with a Rs.3,000 per tonne increase in rates over the last week. Concerning cement, BAI felt that the recent government initiatives such as facilitating import would force domestic manufacturers to cut prices. It also requested the government to exempt imported cement from value added taxes (VAT).
This makes up approximately Rs.23 of the price of one 50-kg bag of cement, according to BAI state
chairman J.R. Sethuramalingam. The existing market rate for cement is about Rs.240 a bag.
The BAI welcomed the Tamil Nadu government’s leadership role in facilitating import and warning cement manufacturers to reduce prices or face the threat of takeover by the State. Builders and contractors have already placed their orders through the Tamil Nadu Cement Corporation to import cement in bulk quantities. While welcoming the State government’s decision to distribute imported cement to the general public without any profit margin through the Civil Supplies Corporation, it warned that customers should not expect to get imported cement at Rs.160 a bag that is being cited as the landing cost, or the price at the point of arrival at the Indian ports. Rather, the final price is more likely to stand at Rs.215 to Rs.220 after VAT, handling costs, clearing and forwarding charges and transport costs are taken into account.
Source: The Hindu
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