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Rajasthan to introduce VAT return on yearly basis   Kota , December 29, 2008: Rajasthan Law and Industry Minister Shanti Dhariwal has said that the traders in the state would shortly be permitted to file Value Added Tax (VAT) returns once in a year instead of filing these every quarter.  Amendments in the legislation to this effect would be introduced in the next session of the state legislature beginning January 1, Dhariwal told at a press conference here.   Logistic outsourcing to touch $90 mn by 2012: Assocham    New Delhi, December 29, 2008: India’s third party logistics business is likely to grow  by 55% reaching the $90 million mark by 2012, a study by industry body Assocham said on Monday. With globalization, the demand of third party logistics (3PL) business, a western concept, is catching up in the country as Indian firms “which are eager to expand in new markets” are turning towards it for better management of their supply chain processes, the chamber said. “One of the contributing factors for this is value added tax (VAT) which is expected to drive Indian industry towards using more 3PL services,” Assocham secretary general DS Rawat said. 3PL cuts conventional logistics costs and helps tackle more complicated tasks, he said. Currently, the size of the business is estimated at $58 million.- PTI   Modi refuses sops to diamond industry    SURAT, December 27, 2008: In keeping with Gujarat’s no-sops policy, Gujarat chief minister Narendra Modi refrained from announcing any direct relief package for the troubled diamond polishing industry while inaugurating the three-day event gems and jewellery event ‘Sparkle’ in Surat on Friday. As far as the relief packages go, the CM said that he could only ‘talk to the Centre’.    The Surat diamond industry has been facing crisis due to a drop in demand from importing countries like the US that is caught up in global recession. Since Diwali, as many as 60% of the 8,000 cutting and polishing units in the city went on a long holiday, leaving one lakh skilled workers jobless.     Narendra Modi said that he would provide alternative employment, training programme and relief to the affected workers directly. “We are the only state to give VAT respite to the diamond industry. And who is the biggest beneficiary of the government’s Jyotigram Yojana (24-hour electricity supply to villages)? It’s the diamond industry. The state government is ready to work as a catalyst, but it is upon the industry to get out of the trouble by modernising itself and add value to its products,” he advised.    e-auction inaugurated in Coimbatore    Coimbatore, December 21,2008 (PTI): Union minister of state for commerce and power Jairam Ramesh has assured tea traders that he would take up with the prime minister, who also holds the finance portfolio, their appeal to bring down from four per cent to one per cent, the VAT for tea traded through auction, as prevailing in some other States.    Responding to the appeal made by Tea Traders Association of Coimbatore, after inaugurating web based E-auction facility here last night, Jairam said that the issue would be put forward to the VAT committee, headed by Ashim Dasgupta, West Bengal finance minister.    He said 500 million kg of India's total production of 950 milliion kgs would be brought and sold through e-auction by January 31, 2009. Steps would also be taken to bring high quality teas, being sold through private parties. By September 2009, there would not be any physical facility in the present auction Centres -- Guwahati, Kolkatta, Siliguri, Jalpaiguri, Kochi, Coimbatore and Coonoor. All auctions would be only through the Internet, he said.    Hoteliers seek tax and VAT relief    Mumbai, December 15, 2008: The Federation of Hotels and Restaurants Association of India (FHRAI) has made a presentation to the government, requesting certain tax exemptions. FHRAI has asked the government for a waiver of luxury tax and value-added tax (VAT) for the next two years. Hotels in Maharashtra pay the highest VAT of 12.5 per cent in the country. The luxury tax payable is around 10 per cent. Hotels in Gujarat pay a VAT of 4 per cent and luxury tax of 6 per cent.  "Luxury tax is a state subject and all the hotels want it to be waived off. We want the government to charge the taxes on the actual rates being charged and not the rack (printed) rates. Since the hotel occupancy is on a decline, the tariff is high when rooms are given at a lower price," added a hotelier from Mumbai. "We have also asked the government to make funds available to hotels at a lower rate of interest," he added. Source: Business Standard    Govt. cuts Cenvat by 4% to spur economy    New Delhi, December 08, 2008: In a move to boost demand and tame global crisis, government on December 7, slashed Central VAT (Cenvat) by 4%. It also announced Rs 200 billion additional non-plan expenditure as part of package to spur the economy. The package targets power exports, housing, auto, small and medium industries and infrastructure sectors through additional funding and guarantees.    The 10-point package contains substantial incentives for the sectors that have been hit by recession, besides allowing India Infrastructure Finance Company to raise Rs 100 billion via tax free bonds by March as part of efforts to support Rs 1,000 billion program in the high-way sector through private public partnership mode. As part of steps to create demand in the economy, the total spending program in the balance 4 months of the current fiscal year, taking plan and non-plan expenditure together, is expected to be Rs 3,000 billion.  Reflecting high priority for the exports, the government provided Rs14.50 billion towards refund of excise duty and incentives, besides giving a guarantee of Rs 3.50 billion for difficult market and product exports. Source: IRIS (08 December 2008)     BJP to rationalise VAT across India     Lucknow, November 18, 2008 (IANS): The Bharatiya Janata Party (BJP) would rationalise VAT (Value Added Tax) rates across the country if voted to power at the centre in next years general elections, its president Rajnath Singh announced in a rally of traders, christened as Hunkar Rally, here at the Chowk Stadium, Rajnath Singh said: Unlike other states, the rate of VAT is considerably high in Uttar Pradesh. The excess hike in the VAT rate is affecting traders across Uttar Pradesh, and they are not able to compete with their counterparts from other states where the VAT rate is a mere four percent, Singh said.  When the BJP will form its government under the leadership of L.K. Advani, the party would rationalise the VAT rate all over the country, giving equal opportunity to traders of every state to prosper, Rajnath Singh maintained.     Govt for uniform VAT in all states between 0-4 pc    MUMBAI, November 13, 2008: The Government is endeavouring to bring about uniform value added tax (VAT) in all states at between 0-4 per cent which would  benefit the food processing industry, a senior Central Government Minister said.     "The Central Government has made zero excise duty. In the case of  VAT, it was supposed to be uniform in all states but different  products attract different rates in different states," Minister of  State for Food Processing Industries, Subodh Kant Sahai, told reporters on the sidelines of the 'Food World India 2008'  event,  here today.    CM promises to review VAT on housing    MUMBAI, November 11, 2008: Chief minister Vilasrao Deshmukh on Monday agreed to look into the demand from builders for doing away with the system of double taxation on the value of the property introduced by the state finance department since last budget. Housing department officials said developers have complained that consumers are reluctant to pay 5% stamp duty as well as value-added-tax of 12% on the value of the property. "The VAT was introduced on property value since the last budget. The CM has  promised to review the levy of VAT," a housing official said.    Deshmukh also assured developers that provisions under Maharashtra Ownership of Flats Act (Mofa) would be suitably amended to reflect changes in the real estate sector. Deshmukh said India has a shortage of 27 billion homes for the average buyer. Maharashtra, thanks to the rapid urbanisation which has now touched 42 percent, accounts for a big share of the nationwide shortage for homes, he added.  Source: The Times of India   VAT collection may drop, says Asim   Kolkata/ Chandigarh November 04, 2008: The Empowered Committee of state Finance Ministers of different states which met in Chandigarh expressed their concern, that in next six months of the current fiscal year  the rate of VAT collection might be impacted due to economic recession.   They are of the view at present there is no such impact on rate of VAT collection as the VAT collection upto September in states has been 23.43 per cent higher than the corresponding period last year. "We are concerned about the possible impact of recession on rate of VAT collection in next six months. We expect that the sectors which mainly affect the rate of collection are Steel and Cement,” said West Bengal Finance  Minister Asim Dasgupta, also the Chairman of the Empowered Committee of Finance Ministers. Source: Business Standard   WTO special additional duty (SAD) ruling    New Delhi November 01, 2008: India while imposing special additional duty (SAD) on imported items after a World Trade Organisation (WTO) appellate body’s ruling that this duty is not consistent with world trade norms, say trade experts. The report was in the context of an objection by the US against India’s practice of imposing countervailing duty (CVD) and SAD on alcoholic beverages.    India imposes an SAD of 4 per cent to balance the incidence of local taxes, VAT and CST. Objections to these duties were raised because they were imposed in addition to the basic Customs Duty. As a result,  the total import duty on wines and spirits came to more than India’s commitments at the WTO. This commitment is known as the bound duty. No country can impose an import duty that is more than the bound duty. “Other countries may file fresh cases in the WTO if they find evidence that India is imposing SAD on goods which is in excess of CST or VAT or other local taxes,” the expert added.   Airlines’ fuel import plans rejected    NEW Delhi, November 1, 2008: Domestic airlines are unlikely to get permission to import jet fuel for their flights as current suppliers — state-run Oil marketing companies (OMCs) — have rejected the request, saying that the imports would exacerbate the ATF surplus and lead to product handling problem. However,  the three OMCs have jointly recommended to the petroleum ministry that the sales tax on ATF could be rationalised to provide relief on ATF as the levy accounts for half the cost of running a flight. “Instead of allowing airlines to import ATF, the possibility of making sales tax/VAT uniformally low in all states or pronouncing ATF as declared goods attracting sales tax/VAT at the rate of 4 per cent may be considered,” said IOC.    Indian plastic industry VAT varies from state to state    October 31, 2008: Plastic industry is facing severe demand crunch causing serious concern to the domestic industry. Demand for major polymers was 10 per cent lower in Q2 this financial year as compared to the same period last year. The slowdown in demand is particularly pronounced in the commodity segment. This slowdown in demand is adversely affecting the industry comprising of 15 raw material producers and approximately 26,000 processing units in the country with adverse impact on the employment of 3.3 million people associated with this industry.    There are multiple factors contributing to this southward slide in demand. One of the major factors is total tax incidence on plastic in India which is over 28 per cent - perhaps the highest in the region. The 14 per cent excise duty levied on polymers and articles of plastic makes plastic products (which are mostly products used by the masses) dearer to masses.    The rate of VAT levied on polymers and articles of plastic varies from state to state, with some states levying as high as 12.5 per cent of local taxes. This consequently pushes the price higher. Levying a uniform VAT of 4 per cent on polymers and articles of plastic across states will rationalise the state VAT structure and will also boost demand. Besides high taxes, legislatives fiats like compulsory use of jute bags for packing food grains and sugar have stifled demand for plastics.  Source:The Economic Times   Airlines may not get tax relief on fuel   NEW DELHI, October 30, 2008: The sharp fall in crude price might have come as a relief  to airlines but could adversely affect one big relief the industry was hoping for — a uniform 4% sales tax on jet fuel, which is much lower than the existing rates.    The aviation ministry has long been requesting the finance ministry to term aviation turbine fuel (ATF) as a declared good so that a uniform sales tax of 4% is levied on it throughout the country. But highly placed government officials said with oil plummeting to a 15-month low now, giving in to this demand may  “no longer be warranted”. “In the past when oil was over $145 a barrel, airlines said they may break even the level of $70. Even if the rupee’s depreciation against the dollar is taken into account, current levels of $55-65 that could fall even further on fears of overall reduction in consumption with the slowdown don’t make a strong case for declaring ATF a declared good. States should take the lead now as a move from our end would be difficult,” said the source.   Moreover, there are legal issues in which amendments to Central VAT and its schedule would be required to do so, something that this government at the fag end of its tenure may be unlikely to do, the official added. However, the finmin may look at providing some relief from custom and excise duties.  Source: The Times of India    Price fall of raw materials puts steel re-rolling mills in trouble   UNB, Dhaka: October 29, 2008: After the sudden rise in prices of raw materials and finished products,  according to industry insiders, neighbouring India imposed a ban on its export of MS rod while Bangladesh relaxed the import of MS rod through withdrawing value added tax (VAT).    But within two months, the prices witnessed a sharp fall on the international market. Facing this new situation, the Indian policymakers are now contemplating to withdraw the ban on export of MS rod, said an owner of a re-rolling mill who used to import raw materials from India. If India withdraws ban on export, the Indian manufacturers will try to export their goods and dump those in Bangladesh, he said adding, if that  happens, the local manufacturers will have to shut down the industries. To save the local manufacturers, he said, the government should restrict the import of MS rod.  Source: The New Nation     Construction sector in Kerala seeks concessions     KOCHI, October 27, 2008: Soaring inflation and the subsequent hike in the interest rates have hit the construction sector across the country, but there are specific issues that cause unease to it in Kerala. More than 30 per cent of the expenditure in the sector in the State arises from taxation, says M.D. Jayaraj, president of Kerala Builders Association. Apartment builders have to pay service tax and labour welfare  cess, apart from VAT.     The registration fees and stamp duty are in addition to it. There is even a tax on the stores and handling of materials. The one-time building tax applicable to an apartment is 10 times that of a house of the same area.  This is because the apartment complex is considered as a single unit for calculating the rate and hence it falls in a much higher slab.    Textile industry in Punjab faces closure     CHANDIGARH, October 23, 2008 (PTI): Rising input costs and high taxes have pushed the textile industry  in Punjab to the brink of closure with many of them even facing the danger of winding up, which could render many people jobless, an industry body said today. Punjab's textile sector mainly consists of small and medium units with considerable noteworthy textile units consisting of stand-alone spinning and fabric manufacturing units. Total textile output of Punjab is estimated at Rs 10,500 crore, including Rs 3,250 crore exports of knitwear, shawls, made-ups and yarns.     The textile industry particularly spinning units located in the state are suffering more because of the higher taxes and levies, higher cotton cost and power shortage," Cheema said. The taxes and levies in the state are much higher than other states. In Punjab various taxes (excluding VAT) are 10 per cent the highest, compared with Haryana 4 per cent, Gujarat 0.5 per cent, Rajasthan 1.6 per cent, Madhya Pradesh 2 per cent and Maharashtra one per cent.     Haryana cuts inter-state CST on Maruti vehicles    Mumbai Oct 21, 2008:The Haryana government on Tuesday slashed the rate of Central Sales Tax (CST) on inter-state sale of Maruti vehicles from 2% to 1% with effect from November 1. The decision was taken at a  meeting of the state cabinet presided over by chief minister Bhupinder Singh Hooda. An official spokesperson of Haryana government said that Maruti Suzuki India had asked for a reduction in CST on inter-state sales, since the general CST rate had been brought down, from 3% to 2% with effect from April 1, 2007.    The Haryana government also decided to reduce the rate of VAT on the sale of earthmoving equipment sold to state and central government departments, Union Territories, Public Sector Undertakings and municipal bodies from 12.5% to 4%. Source: India Infoline News    Remove VAT on perishable goods, Centre tells states     Hyderabad, October 15, 2008: Union Minister of State for Food Processing Industries Subodh Kant Sahai today urged the states to remove Value Added Tax (VAT) on perishable goods and peg it below four per cent on non-perishable items to encourage food processing industry.    "Around 15 companies have already brought in 106.4 million US dollar foreign direct investments into the country's food processing sector," Sahai said while addressing Investors' Meeting for Development of Food Processing Sector in Andhra Pradesh. The meeting was jointly organized by the Central Department of Food Processing Industries and the Food Processing, Agricultural Marketing and Cooperative Department of Andhra Pradesh.    The post-harvest management industry was expected to attract around Rs One lakh crore over the next five years, the Minister said. With this, India can become a food factory with products 'made-in-India' and 'made-for-India,' he said. - PTI    Dealers in UP call off statewide strike against VAT hike    LUCKNOW, October 13, 2008: After a weeklong tussle with the state government, IT channels partners, along with other dealers in UP finally called off the statewide strike. The decision to call off the strike came after commercial tax officials agreed to reduce the 12.5 percent VAT the state government had raised on various items on September 19, to four percent. However, on products like TFTs, UPS and multimedia speakers the 12.5 percent VAT would remain. The state government has also levied two percent entry tax on all the products.    Industrialists arrested for protesting against VAT hike    Lucknow, October 9, 2008: Over sixty members of Indian Industries Association (IIA) were arrested on Monday. They were holding a demonstration against the hike in VAT rate in the state. The police released the industrialists after three hours.“UP must be the first state where industrialists are arrested,” said D S Verma,  Executive Director IIA.    “The industrial associations have been putting forward their demands in a peaceful manner. But seeing no response by the Government after so many days, we had to resort to a public demonstration,” he added. Demanding parity in VAT with the neighbouring states, the industrialists had planned to take out a two- kilometer car rally in the city. The rally was supposed to end at Patel Park where the industrialists had to observe a dharna. The IIA members had also planned to hand over a memorandum of their demands to the chief minister. “We wanted to request the CM to withdraw the hike on VAT and to reduce the entry tax as it obstructs the industrial growth of the state,” said Verma.  Soure: indianexpress   ITTA seeks excise, VAT exemption to import vehicles   New Delhi, Sept. 28, 2008: With the Government intensifying preparations for the Commonwealth Games, tourist transporters have asked the Finance and Commerce ministries to provide them a one-time exemption from excise duty and VAT, allowing duty-free import of vehicles and interest subsidies. This, they argue is imperative, to ensure their logistical preparedness as they would need to invest around Rs 1,000 crore for the same. Indian Tourist Transporters Association (ITTA) president Sarab Jit Singh said, “We have written to the commerce and finance ministries to provide us a one-time exemption from excise duty and VAT under the Export Processing Guarantee Scheme (EPCG) on the purchase of nearly 5,000 vehicles.”    Singh said tourism organizations were allowed to import vehicles under the EPCG scheme but only a handful have been able to benefit from it. He pointed out that the importers had to fulfill export obligations, like earning foreign exchange over a period of eight years. But they do not interact directly with the tourists and hence do not earn any foreign exchange. Source: indianexpress   Uttar Pradesh industries oppose tax hike   Lucknow, September 24, 2008 (IANS): The decision to hike value added tax (VAT) and re-impose entry tax in Uttar Pradesh will sound the death knell for industry, angry industrialists and businessmen in the state said Wednesday.”Coupled with poor infrastructure and all-round adverse environment, the decision of the government will prove to be the last nail in the coffin for industries,” Praveen Sadana, president of Indian Industries Association (IIA), stated at a press conference here. Besides a substantial loss in business, the decision will also accelerate the process of industries migrating to other states that provide a better tax structure and environment, he added.   UP channel protest VAT increment    LUCKNOW, September 24, 2008: Protesting the state government's decision to increase VAT from four to 12.5 percent and reintroduce the two percent entry tax on IT products, channel partners and solution providers across the state called for a two-day strike on September 22 and 23. All IT shops across the state remained closed for the two days.    Products on which government has increased VAT are IT goods, telephones, CDs, DVDs, wireless equipment and several other electronic gadgets, dry fruits, tea and mobile phones. Source: CIOL News     Entry tax levied, VAT leaps from 4% to 21%     Lucknow, September 20, 2008: Tea, mobile phones, television, laptops, electrical goods, steel, iron and their products, arms and ammunition and several other products are soon going to cost more in the state.  This after the state cabinet decided to impose an entry tax and increase VAT on these items on Friday.     While the rate of entry tax will vary from 2 to 3 per cent, the rate of VAT ranges from 12.5 to 21 per cent on different items from the present 4 per cent. The new taxes will fetch an additional Rs 100 crore to the state exchequer per month. The cabinet,  decided to reduce VAT on bhang from 32.5 per cent to 12.5 per cent. Source: Express India    States ask Centre to bear 50% burden of sixth pay revision     New Delhi, September 21, 2008 (PTI): Not keen on bearing a financial stress similar to the one that fell on them after implementation of the Fifth Pay Commission, States want the Centre to share half the burden of pay revision of their employees, in case they go for the next salary hike. "The States would never forget the effect of the Centre's decision on recommendations of the Fifth Central Pay Commission. This had resulted in a financial crisis for the States," VAT panel said in its presentation to the 13th Finance Commission.     The Empowered Committee of State Finance Ministers on VAT said that during that time, the Centre had agreed to bear half of the burden of the States but did not actually provide the assistance. The VAT panel said the Sixth Pay Commission will "consequently cause the States to take certain decisions for the pay structure of their employees and others with serious financial implications".    Due to the Sixth Pay revision, the Centre will bear an additional burden of Rs 15,700 crore on the General Budget and Rs 6,400 crore on the Railway Budget.     ATMA expects Fiscal incentives for radial tyres     September 19, 2008: According to Automotive Tyre Manufacturers' Association (ATMA), representative body of automotive tyre industry in India, the government is considering to offer fiscal incentives to make fuel-efficient radial tyres more prominent for trucks and buses. It is expected that the packages will involve excise duty exemption, reduction in import duty on machinery and a concessional value-added tax (VAT) rate for a 10-year period. ATMA has also stated that such a strategy will fuel the radial tyre revolution in the country.     Centre may extend sops to garment, textile exporters    NEW DELHI, September 15, 2008: Exporters of textiles and garments may be allowed to retain the benefits for a longer time. The commerce department has prepared a Cabinet note pointing out that the sector facing stiff competition from its neighbours China and Pakistan needs to be hand-held for a longer time despite the  sharp appreciation in the value of the dollar over the past few weeks. The Cabinet is expected to consider the proposal soon.    Commerce & industry minister Kamal Nath wrote to prime minister Manmohan Singh last month urging him to intervene and ensure continuation of interest subvention of 4% for the textile sector facing stiff competition from neighbouring countries where exporters are being helped out by the governments. He wanted that the higher DEPB and duty drawback rates should also be not revoked.     China has increased VAT refund given to synthetic and cotton producer to 13% against earlier rates of 9% and 11%, respectively. Pakistan, too, has introduced a 6% R&D assistance to its garment exporters which is now being extended to other segments of the textile sector.  Source: The Economic Times      Exporters’ state taxes refund may come from Centre      New Delhi, September 12, 2008: The commerce ministry has asked exporters to submit a memorandum to the 13 th Finance Commission with detailed data on the refund of state level taxes they are seeking. The ministry has already prepared a position paper, asking the Finance Commission “to give an award in such a way that the amount, which the states do not reimburse, should be held back from the states provided in the central budget to the Department of Commerce in the states.”      The commerce ministry’s decision came after EEPC India in September 2007 asked the Union government to mount pressure on the states for refund of state-level  taxes, which could give some cushion to exporters from the effects of the rising rupee.     According to commerce ministry officials, state level taxes such as electricity duty, central sales tax, mandi tax, octroi, entry tax and VAT add 3-5% to the cost of exports. While West Bengal imposes VAT and electricity duty, Maharashtra, Orissa and some of the other states impose octroi, mandi and entry tax.     The directorate general of foreign trade, after a study on the impact of state level taxes on exports, has pointed out that even as the rupee depreciates, states should refund taxes so that exports become more competitive. EEPC India chairman Rakesh Shah said although West Bengal is supposed to refund  VAT to exporters, the state has not yet been able to set a proper VAT refund mechanism. So, blocking the refund amount from the budgetary allocation will save the states from setting up a refund mechanism as well as help exporters to get back their money faster.  Source: The Financial Express    Hero Electric slashes prices of e-bikes     September 11, 2008: Due to the e-vehicle revolution in the capital Delhi, a number of electric two-wheeler companies like Hero Electric, etc have slashed prices of their vehicles in the range of Rs. 8,000-9,000. The move comes on the back of Delhi government offering a 15 per cent subsidy on the sales price and a 12.5 per cent waiver on VAT.     According to a senior representative of Hero Electric, the company has brought down the prices of its bikes Maxi and Optima to Rs. 19,950 and Rs. 20,000 respectively.    Govt finances likely to come under pressure: RBI     Mumbai (PTI): The Reserve Bank of India (RBI) warned that finances of the Central Government may come under pressure this fiscal due to implementation of recommendations of the Sixth Pay Commission, higher oil prices, fertiliser subsidies and farm-loan waiver.    "The finances of the Central Government may come under pressure during 2008-09 on account of implementation of the Sixth Pay Commission award including payment of arrears, higher oil subsidies,  increase in fertiliser subsidy due to a sharp rise in the price of raw materials and fertiliser in the international market," the RBI said in its report on Currency and Finance 2006-08. The expenditure on account of debt waiver to farmers would also add to pressure on the government, the RBI said.     Although this fiscal's budget has met the Fiscal Responsibility and Budget Management (FRBM) target of annual reduction of 0.5 per cent  of GDP in the revenue deficit, it was still placed at 1 per cent of GDP due to increased expenditure on health and education. On State finances, the RBI report said all states except Sikkim and West Bengal had enacted the Fiscal Responsibility Legislation (FRL) till March-end. All states have also implemented value-added tax (VAT) in lieu of sales tax, it said.    Traders want spice, herb seeds out of VAT   Kolkata September 05, 2008: The Seedsmen Association of Bengal (SAB) has urged the state government to exempt spices and herbs for sowing and gardening purposes from the purview of value added tax (VAT). Speaking at the second annual general meeting of the association, Amiyo Kanti Das, president of SAB, pointed out that even though in 2005, Asim Dasgupta, finance minister of West Bengal, had announced all seeds would be exempt from VAT, in reality the order was not implemented.   Thus, seeds for spices like coriander, imported into West Bengal, were subject to VAT. However, these seeds were not only used as spices, but also consumed as vegetables, and so should be exempt from VAT, contended Das. No marketing fee should be collected by the regulated marketing committee for any seed, he said. At present, only jute seeds were exempt from marketing cess.   West Bengal government increases VAT on mobile phones   NEW DELHI, September 2, 2008: The West Bengal government has increased the VAT rate on mobile phones from 4% to 12.5%. Not surprisingly mobile phone makers and retail chains are up in arms against the order claiming that it will impact sales from authorized outlets and increase the grey market sales.    All others states carry a 4% VAT on mobile phones. West Bengal sells about six million handsets annually. The order from the state finance department has included 'cellular telephones' in the 12.5% VAT category which is generally imposed on cars, TVs and other products. Says Sudhin Mathur, GM, Sony Ericsson India: "The order comes at the time when growth is coming from states like West Bengal which has lot of B and C class towns. Mobile phone is not a luxury item and the government should restore the earlier rate of 4%."    The state has about 300 mobile phone distributors and 15,000 authorised outlets. All major players like RPG Cellucom, Mobile Store, Subhikhsa, Hotspot and Mobile Next operate in West Bengal. The state has about 15% teledensity. The West Bengal mobile market has about 80 million subscribers. Around 10% of handset sales come from the organized retail chains, which are fearing the impact of the rise of the grey market. The order which comes at a time when the government is working to resolve the Singur land case with Tatas, is not going to help its brand image anyway.  Source: The Economic Times       The W.B.  government has increased the VAT rate on mobile phones from 4% to 12.5%.     High VAT, other tax mop-up to cushion impact of pay revision    NEW DELHI,August 28, 2008: Buoyancy in VAT and other tax collections will cushion the impact on finances of states, following a hike in salaries of government employees as recommended by the Sixth Pay Commission, credit rating agency Fitch said. The agency said that fiscal condition of states has improved massively since 1997 when the states implemented the previous pay revision. That time states were grappling with grim fiscal situation with only 9 out of 26 states having a revenue surplus. Now 21 states had revenue surplus in financial year 2007-08.    Though recommendations of the Sixth Pay Commission are only for central government employees, it is a common practice for states to adopt them while revising salaries of their employees. Five states, including Uttarakhand and Uttar Pradesh, have already announced that they will follow recommendations of the Commission. Thus the Sixth Pay Commission reward will be well absorbed by the states, despite an expected slowdown in the economy, Fitch said. As far as the Centre is concerned, the commission's report, to be implemented from September will hit the exchequer by over Rs 20,000 crore this fiscal, Fitch said. -  PTI    Ensure cheap credit to textile cos.    NEW DELHI, August 20, 2008: The commerce department has taken up cudgels on behalf of the textile industry to secure availability of cheap credit for the sector beyond the end of next month. Commerce & industry minister Kamal Nath has written to Prime Minister Manmohan Singh urging him to intervene and ensure continuation of interest subvention of 4% for the sector facing competition from neighbouring countries. All the sops given to exporters to tide over the sharp rise in rupee last year are scheduled to be withdrawn on September 30. Fresh incentives given by China and Pakistan to its textile industry, on the other hand, are expected to make life tougher for Indian manufacturers.     According to Confederation of Indian Textile Industry, India's competitors in China and Pakistan are already being given new incentives to help them during the troubled times. China has increased VAT refund given to synthetic and cotton producer to 13% against earlier rates of 9% and 11%, respectively. Pakistan, too, has introduced a 6% R&D assistance to its garment exporters which is now being extended to other segments of the textile sector, CITI secretary general D K Nair said.     Mr Nair said India should at least make efforts to ensure that state taxes paid by exporters are refunded. In India, we get stuck in technicalities. When it is acknowledged that state taxes need to be refunded, it should be done no matter whether it is done by the state government or the Centre, he added.    The withdrawal of interest rate subvention will have a crippling effect on the sector, the industry claims. Mr Nath's plea comes in the wake of the Reserve Bank of India announcing termination of the interest subvention benefit from September 30 in view of the fall in rupee against the dollar.  Source: The Economic Times     IT industry seeks clarity on taxation     NEW DELHI, August 1, 2008: The IT industry has asked the government to come out with a clear classification of packaged software explaining if this item should be listed under goods or services. Lack of clarity and imposition of service tax on packaged software could lead to increased litigation in the sector, industry experts said.     Confusion arises as the notification does not make a clear demarcation if software will be sold as a good and hence liable for sales tax (VAT) or considered as services bringing it under service tax. The ambiguity is likely to affect the business of companies like Microsoft and Adobe in the way they sell their packaged software. Levy of tax on this item will become effective from May 16, 2008.     The government has made it clear that it intends to subject all software to either service tax or excise duty. Certain aspects of  the new service tax provisions are not very clear with respect to their application to software products.  Source: The Economic Times   CII pitches for common Indian market   NEW DELHI, July 28, 2008: With various entry barriers hurting efficiency and even VAT not being uniform across states, industry body CII today pitched for the common Indian market for faster movement of goods in the country. At a panel discussion here, the chamber said such a common market may be called Indian Economic Council. "We keep looking outside with our thrust on import and export reforms but internally we face so many problems in form of entry barriers between various states. Therefore, to have an Indian Economic Council is very vital," CII National Council on Manufacturing Chairman Surinder Kapur said.     He added the country has been signing free trade agreements with many countries like Thailand, but the country presently needs to have such agreements with states to minimise enrty barriers. Referring to rising steel prices and the unrest prevailing among the consumers, he said India should emulate the example of Japan. He added that steel manufacturers should hold the prices for some time so as to bring some stability and predictability for consumers of steel. Making a case for various reforms, he said the government needs to relook at various laws related to boilers and mining along with reforms in sectors like labour, land acquisition and other financial reforms like in the banking sector, pension reforms among others. -PTI    Gujarat  govt to take up timber issue with CEC    Vadodara July 21, 2008: The issue of pending license applications for setting up 147 timber industrial units at Kandla will be soon taken up by the Gujarat government with the Central Environment Committee (CEC) for clearance purposes, State forest and environment minister Mangubhai Patel said.These applications have been pending which CEC for a long time and this committee appointed by the apex court takes a decision only after taking all relevent aspects into consideration, Patel said.    Terming Kandla as the timber hub of the country, President of Kandla timber association told the minister that high VAT charges has been killing the timber industry in the region which handles 55 per cent of the total national timber import. - PTI   Haryana seeks more funds from Finance Commission    CHANDIGARH, July 18, 2008: Haryana Chief Minister Bhupinder Singh Hooda on Thursday urged the 13th Finance Commission to consider the State’s requirement for upgradation grants worth Rs.9,671.33 crore for select services for the period 2010-15 and recommend liberal grant for proper maintenance of  capital assets of the State estimated at Rs.5,385.92 crore. Mr. Hooda made these demands during his meeting with the 13th Finance Commission led by its Chairman Vijay Kelkar here. He also drew the attention of Dr. Kelkar towards reduction in Haryana’s share in Central taxes from 1.238 per cent to 1.075 per cent, which was lower by more than 13 per cent, due to the recommendations of the 12th Finance Commission.    He suggested as devolution criteria a weightage of 50 per cent to the population, 15 per cent to income distance, 10 per cent each to fiscal discipline and tax efforts and 5 per cent each to social indicators and contribution to central taxes. He also proposed that 50 per cent of the service tax devolved to the States from which they are collected. Mr. Hooda also urged the Commission to safeguard the interests of manufacturing states like Haryana during the implementation of the Goods and Services Tax (GST). He proposed that NSSF loans availed up to date be consolidated at an interest rate of 7.5 per cent like other Government of India loans.    He also congratulated the State for its successful introduction and implementation of VAT from April 1, 2003. Revenue from VAT had more than doubled since 2003-04 and had thus proved to be the main driver of the revenue growth in the State. He said Haryana’s rate of growth of Gross State Domestic Product (GSDP) at current prices was 13.38 per cent from 1999-2000 to 2006-07 with a 7.89 per cent average annual real growth in per capita income during the same period. Also, the trend growth rate of Haryana’s own revenue receipts at 16.38 per cent was well above the national average of 11.64 p.c. for all States for 1999-2006, which pointed to good revenue efforts made by the State.    Commercial tax collections surge 36% in Apr-June    Bhubaneswar, July 13, 2008: The commercial tax collection comprising Orissa Sales Tax/Value added tax (VAT), central sales tax (CST), entry tax, professional tax and entertainment tax surged 36.25 per cent during the first quarter of the current fiscal. It increased to Rs 1114.16 crore during April-June compared to Rs 817.76 crore collected during the same period in the previous fiscal.      Substantial increase in the contributions from the corporate sectors like the National Aluminium Company Ltd (Nalco), Mahanadi Coalfields Ltd (MCL), Rourkela Steel Plant (RSP), Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Orissa State Beverages Corporation (OSBC) helped in higher collections, official sources said.   The collections from the OST/VAT during the first quarter of the current fiscal was Rs 796.13 crore compared to 606.5 crore in the previous fiscal, recording a growth of 31.7 per cent. In June Rs 364.23 crore were collected which is 27.5 per cent more than Rs 277.66 crore collected last year. The Central Sales Tax (CST) collections increased by more than 100 percent to Rs 158.7 crore compared to Rs 78.97 crore last fiscal.  Source: Business Standard     Hero Electric welcomed the tax rebate on electric vehicles  Delhi, July 09, 2008: Hero Electric, a 100% subsidiary of Hero Group and India’s largest manufacturer of energy-efficient, environment-friendly electric two-wheelers, announced the details of its plans to ramp up production even as it welcomed the tax rebate on electric vehicles announced by the Delhi and other state governments.    The Delhi government, to mitigate the rising fuel prices and promote eco-friendly, non polluting means of transport, has recently announced a 15 per cent subsidy on the base price of the electric vehicle (EV) and a 12.5 per cent exemption of VAT. This translates into a subsidy of 24.5% on the ex showroom  price of the Electrical Vehicles.     Hero Electric two-wheelers can run between 50 km and 70 km per battery charge; each charge consumes one unit of electricity. Hero Electric offers 4 models between Rs 15170 and Rs 24600, not only are the Hero Electric Scooters the most economically priced, at Rs 0.10 (10 paisa) per kilometre, they are also the least expensive to operate, almost 1/10 th of the cost of running a petrol driven scooter.     Daimler-Hero JV to make 70,000 trucks enjoy total refunds on VAT and CST    NEW DELHI, July 07, 2008: The Rs 4,400 crore Hero-Daimler joint-venture project to build commercial vehicles will come up in Tamil Nadu. A memorandum of understanding (MoU) under the name Daimler Hero Motor Corporation (DHMC), will be signed on Monday at Chennai in the presence of Hero and Daimler top brass. The head of the Daimler truck division Andreas Renschler will fly down from Stuttgart for the signing ceremony with the Tamil Nadu government.     The manufacturing plant, which will initially focus on light and medium commercial vehicles, is likely to be established in a more than 1,000 acre campus. It will be an integrated manufacturing facility and will commence operations from 2010, with an initial production capacity of 70,000 trucks per year.  It will be an expandable facility and will roll out heavy commercial vehicles in the 49 tonne pay load capacity by 2012. It will give direct employment to around 2,000 people.    The DHMC project will be set up under the Tamil Nadu "Ultra Mega Integrated Automobile Projects Policy" which offers huge concessions to automobile projects involving an investment of not less than Rs 4,000 crore in a single location. DHMC would enjoy total refunds on VAT and CST, 100% exemption from stamp duty, concessional land and concessional power supply, but will have to start production within seven years of signing the MoU with the government. Besides the entire 'Input tax' is also refundable under this investment promotion policy.  Source: The Economic Times     Truckers called off strike...     New Delhi, July 04, 2008: Truck owners called off their nationwide strike early on Friday after a marathon meeting between the transporters' association and the government during which the administration agreed to lower service tax and provide unbranded diesel.    New Delhi, July 02, 2008: Truckers began their indefinite strike on Wednesday to protest against the increasing fuel prices and toll tax. Meeting with Transport Minister TR Baalu today, the truckers demanded removal of sales tax on diesel and imposition of VAT. The nationwide-strike is bound to further spiral the rise in prices of essential and non-essential commodities.    The All India Motor Transport Congress (AIMTC), which is holding an agitation in the Capital, claims the support of all state transporters’ associations with a combined fleet size of 48,00,000 trucks.     All goods taxes may come within GST    NEW DELHI, July 02, 2008: States may have to opt for subsuming all taxes on goods, like purchase tax, under the unified goods and service tax (GST) regime. The Centre, which is likely to give its report on the empowered committee’s recommended framework on GST in the next 15 days, is against continuing such taxes in the new regime.    Sources said continuing such taxes in the GST regime would be anomalous. It would not just be against the spirit of GST but would also lead to issues with the input credit system. The Centre is fine-tuning its responses on the GST framework given by the empowered committee. The report is expected to be finalised in a fortnight and will be given to the committee for further discussion.    At present, purchase tax is imposed on purchases of certain commodities in some states. The Centre’s view is that purchase tax is levied on the same transaction that would attract Value-Added Tax  (VAT).    Moreover, states can extend the tax to any item in future, undermining the whole objective of GST. States such as Punjab and Haryana had opposed subsuming of the tax citing revenue losses. The  Centre, however, is of the view that GST was to replace VAT which also gave states substantial revenues and the argument of revenue loss did not hold much water.   The Centre is also opposed to having separate rate for goods and service tax as suggested by the committee in its blue print of GST. Sources said the Centre favoured the recommendations made by the  joint working group in this regard as that was in line with global best practices and suited to India.  Source:The Economic Times    Govt may not compensate states for petro product revenue loss   NEW DELHI, June 29, 2008: The Centre may not accept the demand of states that it share half of their Rs 8,000 crore revenue loss due to cut in sales tax on petroleum products, announced after the rise in administered prices of these fuels, sources said. However, the Union Government is still examining the issue and yet to take a final call on the demand, the sources said.     Empowered Committee of state finance ministers on VAT had earlier this month said that states would lose close to Rs 8,000 crore this fiscal following the cut in sales tax on petrol and diesel. States have asked the Centre to compensate half the amount they would be losing. "Several of the states, confronted with this unusual situation (of the Centre's move to raise prices of petro products), have taken the decision to reduce sales tax on petrol and diesel and cut VAT rate on LPG or to provide subsidy.     We want 50 pc of this loss incurred by states to be shared by Government of India," VAT Panel Chairman Asim Dasgupta had said.  According to VAT panel Chairman Asim Dasgupta, 10 of the total 33 states and union territories cut sales tax on petrol, while 15 have reduced the levy on diesel.  Source: The Economic Times   India's first electric car Reva launched in Delhi, VAT exemption.   New Delhi, June 25,2008 (IANS): After 13 years of research and development, India's first electric car 'Reva' was launched in the national capital by Delhi Chief Minister Sheila Dikshit Wednesday morning. Describing Reva as "a little cute car", Sheila Dikshit said her government was committed to taking steps to improve the city's environment.    To popularize the battery-operated car, the government announced a 15 percent subsidy on its base price, 12.5 percent exemption of value-added tax (VAT), and a refund of road tax and registration charges.   The subsidy and exemptions would bring down price of Reva's base model to Rs.299,000, and it would cost users 40 paise per kilometre. Asked about their target in the first year, Reva Electric Car Co's president of India operations Girish M. Rakhe said: 'We will be very happy if we sell 3,000 cars in the national capital in our first  year.'    Describing Reva as 'a little cute car', Sheila Dikshit said.     Stalemate over VAT in Kerala   June 24, 2008: Natural rubber traders in Kerala are waiting for the government to resolve the stalemate over value added tax (VAT). Natural rubber, which attracts 4 percent VAT, is not eligible for refunds on tax, which is allowed only above 4 percent.   Source: BUSINESS STANDARD     Delhi fills diesel in Haryana as VAT reduced from 12% to 8%    NEW DELHI, June 22, 2008: Diesel users in the Capital are now heading to Haryana to buy at lower prices. With Haryana having reduced value added tax (VAT) rates on diesel from 12% to 8%, the sale of diesel in the Capital has dipped by about 30%.     The Delhi government had consciously decided to not give a subsidy or reduce VAT on petrol or diesel after the price hike on the ground that public transport was on CNG and only private vehicles used  diesel and petrol. Chief minister Sheila Dikshit, while announcing a subsidy on LPG cylinders for domestic consumers, had made it clear that no such subsidy was likely in the near future as the aim was to get more people to switch to CNG-based public transport.     According to the Delhi Petrol Dealers Association, the city sells approximately 12 crore litres of diesel every month. The rate of VAT levied on diesel in Delhi is 12.5 per cent as of now. Uttar Pradesh has also brought down the VAT component on diesel by Rs 1.5. A consumer who was buying ordinary diesel in the city at Rs 31.80 per litre is now buying it for Rs 34.80. In case of branded diesel the consumer has to shell out Rs 2.25 extra. "Figures obtained from oil companies for the first 10 days after the variations in VAT shows that there is an approximate drop of about 30 percent sale of diesel in the Capital," said sources from the Delhi Petrol Dealers Association.  Source: The Times of India     Fuel stations want Delhi to cut VAT on diesel    New Delhi June 21, 2008: Delhi petrol pump dealers today threatened to go on agitation if the state government did not reduce VAT on diesel to bring rates at par with neighbouring states like Haryana. "We have lost 30 per cent of our sales to Haryana during the past 10 days fuel because there costs less," Delhi Petrol Dealers Association General Secretary Anil Bijlani told reporters here.     Haryana has reduced VAT on diesel to 8.8 per cent from 12 per cent with effect from June 9. "This  reduction of tax in Haryana has made diesel more expensive in Delhi," he said. Delhi sells about 12 crore litres of diesel every month and if the state did not reduce VAT sales will drop to half. Neighbouring Uttar Pradesh has also reduced VAT on petrol by Re 1 per litre and diesel by Rs 1.5 per litre.    "Both the (Delhi) state as well as our dealers will suffer huge losses if the rate of VAT on diesel is not brought at par with the neighbouring states," he said, pointing that the UPA Chairperson Sonia Gandhi had also asked Congress-ruled states to reduce VAT on petroleum products to give some relief to the consumers. "We will be left with no option but to agitate if the Delhi government does not reduce VAT on diesel from present 12 per cent to 8 per cent," Bijlani said. "We will wait for 7 days for the government to respond... We may even go on a strike."  Source: Press Trust of India     MP govt. to slash tax on LPG and diesel     Bhopal, June 19, 2008 (PTI): In a bid to provide relief to people, Madhya Pradesh government on wednesday decided to slash the tax on LPG and diesel. "Now the entry tax on LPG would be reduced lowering the price of an LPG Cylinder by Rs 10, an official release said adding that the decision was taken at a meeting presided over by Chief Minister Shiovraj Singh Chouhan. Similarly, VAT on diesel has been reduced by two per cent from 25 to 23, the release said.     After the meeting, the Chief Minister said the decision to slash taxes on the two products would incur a revenue loss of Rs 140 crore to the state. Earlier, the state government had reduced VAT on diesel by one per cent from first April, 2008. Chouhan said earlier VAT on diesel was 28.75 per cent. But in the interest of farmers and other consumers, he said the state government has reduced it by 2.75 per cent from first April, 2007.     Keeping in view of high inflatation rate and sharp price rise, Chouhan said the state government again reduced VAT on diesel by one per cent from 26 to 25 from April 1, 2008 incurring a revenue loss of Rs 85 crore. Thus, the Government has reduced VAT on diesel till date by 5.75 per cent in three installments, the release added. - PTI   Car duty may cost you up to Rs 50,000   NEW DELHI, June 16, 2008: The impact of the imposition of the specific excise duty on big cars will be more than originally anticipated. From Monday, bigger cars and SUVs will be dearer by Rs 20,000 to Rs 50,000, as auto companies finalise their price tags to adjust the burden of the specific duty slapped by the government.    Government has slapped additional specific duty of Rs 15,000 on vehicles with engine capacity of 1,500 -1,999 cc and Rs 20,000 on vehicles of 2,000 cc and more, with immediate effect, on Friday. However, customers will have to shell out higher prices due to the cascading impact, as 12.5% VAT, 2% CST, education cess and octroi on the ex-factory prices will be charged over the additional specific duty. The increased component of higher insurance premium and road and registration charges, which are charged on vehicle’s ex-showroom prices, will further increase consumer price.  Source: The Economic Times    Petrol now at Rs 54.98 per litre, LPG cylinder Rs 334    Pune, June 08, 2008: After the revision, the price of a litre of petrol now stands at Rs 54.98 while that of diesel is Rs 38. The price of an LPG gas cylinder is Rs 334.43.  “The impact of the hike was felt on Saturday which was the first day of its implementation. On Saturday, people were apprehensive about the prices, which caused a slight dip in the sales, but the sales were back to normal soon after,” said Vijay Bhave, divisional president of the All India LPG distributors Federation. “The State Government’s decision to waive the octroi and the Pune Municipal Corporation’s initiative to waive the four per cent of VAT brought down the price of the cylinder from Rs 358.30 to Rs 334.43,” he added.  Source: ExpressIndia    UP, others cut taxes on fuel    LUCKNOW, June 7: UP chief minister Ms Mayawati today announced cuts in sales tax on petrol, diesel and LPG prices. Ms Mayawati announced a cut of Re 1 per litre for petrol and Rs 1.5 per litre for diesel, while LPG will be cheaper by Rs 11.35 after waiver of VAT.     The new petrol price in the state will now be Rs 56.16 per litre, while a litre of diesel will now cost Rs 36.23. The Tripura government has also reduced cess on fuel from 5 per cent to 2.5 per cent, according to a PTI report. Following suit, the Sikkim government has also reduced sales tax on petrol and diesel with immediate effect, thereby bringing down their prices by Rs 2 and Rs 1.40 per litre respectively.    These steps came even as the Centre said it would not roll back the hike in petrol, diesel and LPG prices that was effected on June 5. “The decision ... is final and there will not be any change to it,”  petroleum minister Mr Murli Deora said in an interview to a Hindi news channel. SNS    Punjab CM refuses to reduce VAT on Petrol    CHANDIGARH, June 05, 2008: Punjab Chief Minister Parkash Singh Badal on Wednesday while strongly condemned present hike in prices of Petroleum products, ruled out the possibility of reducing VAT on Petrol and diesel in the state which is at present 27.5 and 8 percent respectively and highest among all the northern states.    Chandigarh charges only 22 percent VAT on Petrol and at national level VAT is charged at an average  of 20 percent. Interestingly Badal being leader of opposition had himself demanded to withdraw hike in VAT on Petrol by the then Amarinder Singh Punjab governmetn which is reeling under financial crisis didn't want to loose income from VAT on Petrol which accounts for highest share in VAT collection of about 5000 crores. Punjab collected total Vat till January 2008 were Rs 4,966 crore, including Central Sales Tax (CST) of Rs 294 crore. The Vat collection from petrol only accounted for Rs 1,239 crore, agriculture accounted for Rs 592 crore, liquor Rs 24 crore, automobiles Rs 497 crore and other services Rs 2,317 crore.    Tax reforms back on track, CST cut to 2% from June   NEW DELHI, May 31, 2008: Ending uncertainty over a major tax reform initiative, the central government on Friday notified reduction in central sales tax (CST) to 2% from June 1 as compared to the current 3%.  ”The central government and the empowered committee of state finance ministers have further agreed that the compensation for revenue loss to the states in any year arising from the lowering of CST will be limited to the proportionate loss based on the actual collection of CST in the relevant year, ” a finance ministry statement said. Elimination of CST is crucial to implementation of unified goods and service tax from April 1, 2010.   It is, however, not clear if the centre and states have reached an agreement on raising the floor rate of VAT from 4% to 5% in the current fiscal, which was a part of the compensation package. The hike would impact goods like edible oils, bread, intermediate goods footwear which are now under the general rate. While both sides have agreed on reduction in CST to 2%, certain elements of the compensation package are yet to be ironed out, sources said.    CST, which was reduced from 4% to 3% on April 1, 2007, was to be slashed to 2% from April 1, 2008. The reduction could not be carried out with both the centre and the state governments failing to agree on the compensation package. With the reduction in CST rate from 3% to 2%, the states are estimated to lose Rs 12,000 crore to Rs 13,000 crore in revenues. Source: Economic Times   Assocham seeks VAT cut in entertainment & media   Mumbai, May 29, 2008: The Associated Chambers of Commerce and Industry (Assocham) released a study on the entertainment and media (E&M) industry, raising certain issues, which they will present to Prime Minister Manmohan Singh at a meeting in New Delhi during the the first week of June. The chamber demanded that considering the rapid growth in E&M and in order to make India a hub for E&M, this sector should be brought under the concurrent list from the state list. It has also demanded that the government should enact the Optic Disc Law for curbing piracy. Venugopal Dhoot, president of Assocham has demanded that value added tax (VAT) and service tax be removed or VAT brought down to 4% from the current 12%.  SRK seeks removal of VAT on entertainment industry MUMBAI, May 27, 2008: Shah Rukh Khan on Tuesday asked the Centre to remove  Value Added Tax (VAT) and service tax on the entertainment industry and sought the conferment of de-facto industry status on it so that it can earn certain tax incentives. It has become necessary to bring in entertainment industry under the "concurrent list" so that it can be governed by Central rules and enjoy tax concessions announced by the latter from time to time, Khan said in a statement.    At present, the entire entertainment and film industry comes under state governments jurisdiction as a result of which, it has not been able to enjoy the already conferred dejure industry status on it. Shah Rukh Khan would release a study on the entertainment  industry this evening highlighting the need for the removal of VAT and service tax. The study is done by Associated Chambers of Commerce and Industry of India (Assocham). Retaining the industry in the state government list deprives the tax concessions given by the Centre, Assocham said in its study.     The government has set up five groups on piracy, taxation and custom duties, exports of films, promotion, development and marketing for films. As per the Finance Act of 2007, the Central Excise department has issued notices for recovery of service tax from the industry in cases of renting, leasing, letting immovable properties, Assocham pointed out. As the film industry is burdened with various types of taxes and fee imposed by state governments, the Centre should exempt transactions between producers and distributors, Assocham said. - PTI   Shah Rukh Khan on Tuesday asked the Centre to remove  Value Added Tax (VAT) and service tax on the entertainment industry and sought the conferment of de-facto industry status on it so that it can earn certain tax incentives.   ITC asked for removal of excise duty and VAT rate at 4 per cent     Kolkata May 24, 2008: ITC, one of India's largest diversified conglomerates, said its sales may be hurt by the consumer shift towards lesser taxed and illegal products following the high taxation rates. The high taxes on tobacco and related products, as much as 30 per cent annually, are compelling people to smoke bidis, chew tobacco and zarda and push contraband trades, according to the Kolkata-based company.    The sales of illegal cigarettes doubled to 300 million sticks a month from around 150 million, ITC said. For  example, non-filter cigarettes had become viable as this market was flooded with smuggled and tax evaded  cigarettes. This situation could only be rectified through the moderation of taxes on tobacco, minimization  of discriminatory taxes between different classes of tobacco products and a regulatory framework, the company said.     The company asked the government for an interim removal of excise duty and standardization of the VAT rate at 4 per cent for all food products to provide relief to the consumers and sustain growth in this sector.    Source: Business Standard   Common tariff code for goods next fiscal   NEW DELHI, May 21, 2008 : States planning to unveil a common tariff code for classification of goods may now be able to operationalise it only in the next fiscal. Although the Centre has already done the groundwork  needed for the code, states now want to impart some local element to it. The rollout was scheduled to begin this fiscal. The new Harmonised System of Nomenclature (HSN), modelled on the central excise, customs and followed internationally, was discussed at the last meeting of the empowered committee of finance minister. India follows the eight digit HSN code that is primarily classification of goods for tariff purposes. The Centre wanted states to go in for a common return form, procedures and tariff code to give state tax administration a complete facelift and make it more efficient.     While the states have in-principle agreed to the Centre’s proposal, they want to introduce some local element as completely switching to the HSN will make it difficult to have deviation in rate of taxation of certain items. At present, there is certain level of uniformity in rates at which VAT is levied all over the country on most products; but there is none in forms, tariff codes and audit procedures.     This facelift of the states’ tax administration was a precursor to the unified goods and service tax that is expected to roll out from April 1, 2010. The HSN for state VAT has been prepared by the Central Board of  Excise and Customs officials. State finance officials have examined it in detail and given their  recommendations to the empowered committee. The committee at its meeting on May 5 also discussed the  e-governance framework that is aimed at computerising the value added system in the country.  Source: The Economic Times   CST reduction appears to be in limbo   New Delhi, May 18, 2008 (PTI):  The fate of planned reduction in Centre Sales Tax by one per cent from this fiscal hangs in balance with the impasse between union and state governments over the compensation for revenue loss to states continuing. Already one and a half months of this fiscal are over, but CST reduction from three per cent to two per cent is yet to take place due to continued stalemate between the Centre and states, sources said today.   The CST cut is not likely to be introduced with retrospective effect from April 1, 2008, VAT Committee Chairman Asim Dasgupta had said earlier. While the Centre insists that state governments keep up the  promise given by their finance ministers to increase the VAT rate from four to five per cent, impose VAT on textiles from this fiscal, states are not ready for it.    States attribute their decision not to go for VAT rate hike to high inflation, which has reached 7.83 per cent. They also say if the Centre agrees to impose VAT on import, the revenue loss to state governments from CST reduction would be partly compensated and the burden on union government to provide relief to states would come down, the sources added.    Imposing VAT on import is another item of the package agreed by the Centre and states, but yet to be implemented. However, the proposal is not easy to put into place, because it would certainly be challenged in WTO, the sources said. Besides, it would also make it difficult for the Centre to impose countervailing duty, so essential for level-playing field between domestic and foreign players, they said. PTI   UP mulls simplifying VAT   Lucknow, May 15, 2008: Acceding to the long-pending demands of traders in Uttar Pradesh, the state government is planning to simplify the present structure of value-added tax (VAT). "We have prepared a draft seeking the amendments in the present VAT system and want to make it trader-friendly. We are also working to develop a software for the traders to submit their returns online. We want to make it a paperless procedure," said Govindan Nair, principal secretary (commercial tax). The state government also announced exempting handmade carpets (silk and wool) from VAT. "We will also close about 50 check-posts in the state in phases in order to safeguard the traders' interest. Unclassified items will also be categorised," he added.    For records, revenue collection after the implementation of VAT in Uttar Pradesh has shown good results in the first quarter. The collections showed an increase of 11 per cent for the first three months of the year. The  increase in the collections in the corresponding period last year, on the other hand, were to the tune of 5-6  per cent.    Uttar Pradesh introduced VAT on January 1 this year. The department has set a revenue collection target of Rs 19,555 crore for the current year. The collections made last year (2007-08) were Rs 15,040 crore. "We expect an increase of 30 per cent in the overall collection this year," said Govindan Nair .  Source: Business Standard     UAE could start VAT early next year    Dubai, May 08, 2009: The UAE is likely to introduce a value added tax (VAT) early next year as studies into its implementation have reached an advanced stage, a senior Dubai Customs official said. The indirect tax on goods and services will replace the existing customs duty, which will be phased out as part of free trade pacts the GCC will sign with a number of key trading partners such as the EU, China and India.   "Having spent two years studying VAT around the world to ensure that what is proposed for the UAE and the GCC is best practice, we are now in phase two, which is looking at how to successfully implement VAT," Dubai Customs executive director Abdul Rahman Al Saleh told a seminar at the Arabian Travel Market.    The infrastructure to levy VAT will be ready by the last quarter of 2008. It will be introduced after the federal government's approval and will be done across the country. "Most likely it will be in early 2009," Al Saleh  said. He said other GCC states are also expected to adopt VAT after it is introduced in the UAE. Source: Gulfnews     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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