Tax advocates urge Delhi govt not to hike VAT
New Delhi, December 13, 2011 (PTI) The All India Tax Advocates Forum (AITAF) today
asked the Delhi government not to propose any hike in VAT during the budget for next fiscal in view of the rising inflation and instead focus
on realising tax dues amounting to over Rs 3,000 crore. "Delhi is in need of resource mobilisation to fund its manifold developmental
activities. But, it will not be advisable to raise resources through further hike in VAT (value-added tax) rates in view of rising inflation,
which is hitting the common man very hard," AITAF President M K Gandhi said in a statement. He said as the exercise for preparation of the
Budget 2012-13 for the Delhi government gathers momentum, all efforts
must be made to recover tax dues locked up in thousands of tax disputes cases rather than raising VAT.
Before VAT came into force in 2005, sales tax demand of nearly Rs 650 crore was locked up in as many as 3,249
cases, which are at various stages of appeals. Similarly, an amount of nearly Rs 2,400 crore is stuck due to nearly 14,800 objection cases
pending before VAT authorities for disposal, the statement said. "The
Delhi government targeted to raise revenues of over Rs 12,500 crore through VAT in 2011-12. Thus nearly 25 per cent of VAT revenues have
been locked up due to pendency of disposal of appeal and objection cases. "Therefore, the government should focus on expeditious disposal
of these pending VAT-related cases," Gandhi, who is also a leading tax
Ministry realises tourism potential of films
New Delhi, December 7, 2011: The tourism ministry has rolled out the red carpet for filmmakers, particularly
from abroad - promising a bagful of concessions and logistics support,
including swift visa facilities and custom clearance for film equipment - if India gets a prominent space in their movies.
Ministry sources said tourism minister Subodh Kant Sahai went all out to
woo filmmakers at the recently concluded international film festival in
Goa. "Sahai met 23 filmmakers from India and abroad and others associated
with the industry to clear the unresolved issues of taxation, VAT refund, visa, customs and security-related clearances and permission for
shootings, among others," a senior ministry official said.
Chairman of Fortissimo Films Michael J. Werner, Julie Marlow of Australia, director Joel Frges and Eurimages executive director Roberto
Olla from France were among the few foreign filmmakers who met Sahai. Vishal Bharadwaj, Rakeysh Omprakash Mehra, Zoya Akhtar and Raj Kumar
Hirani, were some of the Bollywood big wigs who met him. Source: India Today
Petrol in India costlier than in US due to VAT
NEW DELHI, December 1, 2011: Petrol in India is costlier than in its neighbouring
countries and in the US, primarily because of high taxes. Petrol in Delhi today costs Rs 66.42 per litre as against Rs 44.88 a
litre price in the US, Minister of State for Petroleum and Natural Gas R
P N Singh told Rajya Sabha in a written reply to a question. Even after the November 16 reduction of Rs 2.22 per litre in rates,
petrol at Rs 66.42 a litre in Delhi is costlier than Rs 48.64 a litre in Pakistan.
Whereas in Sri Lanka it is Rs 61.38 per litre, Rs 52.42 a litre in
Bangladesh and Rs 65.26 per litre in landlocked Nepal. Incidentally, Nepal does not have a refinery and imports all its requirement from
India. However, petrol in Europe is costlier than in India. In the UK,
it is priced at Rs 104.60 per litre. Singh said of the Rs 66.42 per litre price of petrol in Delhi includes
Rs 26.59 a litre because of taxes (both central excise and local sales tax or VAT).
The US has only Rs 5.32 per litre tax on petrol while it is Rs 62.47 a litre in UK.
UP traders oppose proposal of FDI in retail
New Delhi/ Lucknow November 25, 2011: In the backdrop of the raging debate over Foreign Direct
Investment (FDI) in retail, Uttar Pradesh traders on Thursday reiterated their
stiff opposition to the proposal. The traders under the banner of Akhil Bharatiya Udyog Vyapar Mandal
(ABUVM) maintained FDI in retail would spell death knell for the small time retailers.
The traders are pressing for their 27 charter of demands from the
central and state governments, including uniform Value Added Tax (VAT)
rate across India, rising petroleum prices, corruption, constitution of
a high-powered committee for traders, traders' pension, waiver of
license/quota permit etc.
VAT on any artificial enhancements termed "boob tax"
Mumbai, November 2, 2011: The British HM Revenue and Customs is planning to
impose a tax on cosmetic surgeries by slapping a Value Added Tax (VAT)
on any artificial enhancements and procedures. This vanity tax is being
termed "boob tax". It would send the cost of operations such as breast enlargements,
facelifts, tummy tucks and liposuction soaring by 20 per cent if
implemented. And patients undergoing such operations will be liable to
pay the tax unless they can persuade a doctor that the operation is being carried out for "therapeutic" reasons.
The announcement has caused much furor amongst both patients and
cosmetic surgeons. And while most stand against it, there are some like
glamour model Peta Todds, who find it only fair that cosmetic surgeries,
just like cosmetics, should be taxed. "We pay VAT on all essential things like clothes and petrol. People who
have a surgery just to look better should also have to pay the tax.
It's a luxury, not a necessity," she tweeted. Source: DNA
Food processing industry seeks govt help to grow abroad
Chennai October 24, 2011: The food processing industry in India is looking at government support,
as tax incentives and other measures, to strengthen brand India abroad.
The $14 billion food processing industry, growing at 12-13 per cent at
present, could grow at higher rates if effective meaures are taken, said
the industry body. Speaking to reporters on the sidelines of inauguration of Foodpro 2011,
the ninth Indian Food Processing and Food Technology Fair organised by
Confederation of Indian Industry (CII) in Chennai, Piruz
Khambatta, chairman, CII National Committee on Food Processing and chairman and
managing director, Rasna (P) Ltd, said: "The government should come out
with tax incentives for R&D, value-added products, quality control and
education to support the industry. We are also recommending a corporate
farming structure in which the industry can lease farmland from farmers
where the owners could produce agri products as per the requirements of the company."
At present, on the one hand the government talks of the need for value
addition in food processing while on the other end it imposes tax on
value added products. "It is an irony," he said. Food processing segment
should be included in zero GT and zero excise duty regime along with
lower value added tax (VAT) regime. It should also consider tax incentives for R&D and education programmes in the industry.
Source: Business Standard
VAT on sugar, textile from April 2012
New Delhi, October 16, 2011: The Empowered Committee at a meeting held yesterday has decided to levy
value added tax (VAT) on sugar and textile. The VAT may be imposed 4-5
per cent on these items from April 1 next year. The meeting was held under the chairmanship of Deputy Chief Minister of
Bihar Sushil Kumar Modi. Besides, Delhi Chief Minister Sheila
Dikshit, who looks after the Finance Department of the Delhi government, Finance
Minister of Haryana, Punjab and other states attended the meeting.
Briefing reporters after the meeting, he said till 2005-2006, the Union
Government was collecting additional central excise duty on tobacco,
sugar and textile and the states were getting one per cent more in their
share from the central divisible pool of the total tax proceeds. However, the central levy was abolished as recommended by the 13th
Finance Commission and hence, the states too suffered losses on revenue. Source: Tribune News Service
Indirect tax reforms to rev up revenues, GDP
New Delhi October 10, 2011: In its efforts to build a broad consensus on the proposed goods and
services tax (GST), the Associated Chambers of Commerce and Industry of India (Assocham) has said the indirect tax reforms
would lead to buoyancy in government revenues, increase the country's GDP and reduce inflationary pressures. The GST would
lead to reduction in prices of most manufactured goods by about 10 per cent, the 1920-established industry chamber said here
today. "Once the GST replaces all multiple taxes, it is going to be the biggest tax reforms in independent India's
history," it said in a recent study titled GST Beyond Growth.
The tax-GDP ratio too may go up by 1.5 to 2 percentage points with the net revenue jumping by Rs 1.5 lakh crore a year,
said the study. The GST will create a single Indian common market and there will be no distinction between goods and
services with seamless input tax credit allowed throughout the supply chain. The study assumes importance since Finance
Minister Pranab Mukherjee had sought the help of industry chambers to build a consensus on the GST.
The GST has already missed two earlier deadlines of 2010-11, 2011-12 and is again unlikely to be enforced from the
next financial year starting April 1, 2012. Reason: differences between the Centre and states. While a Constitutional amendment
is being considered by a parliamentary standing committee, the next financial year is the time set for implementing the GST,
which is a comprehensive value-added tax on goods and services levied at each stage of the supply chain. The GST, which is an
indirect tax to imposed by all states and the central government, is meant to replace existing levies such the state
VAT besides the Centre-imposed excise duty as well as the service tax. Source: Business Standard
PSU OMCs hike in ATF prices depending on the local sales tax or VAT
New Delhi, October 1, 2011: State-owned oil marketing companies hiked jet fuel price on September 30, 2011 by 1.5% as falling rupee made oil
imports costlier. ATF price at Delhi's T3 airport was hiked by Rs. 899
per kilolitre (kl), or 1.5%, toRs. 58,578 per kl with effect from Friday
night. ATF in Mumbai, home to the nation's busiest airport, was hiked
by Rs. 907 per kl more to Rs. 59,359 per kl from Saturday, 1 October 2011.
as against the old price of Rs. 58,452.31 per kl. Jet fuel makes up for
50% of an airlines' operating cost. ATF prices vary from airport to
airport, depending on the local sales tax or VAT. The three fuel retailers revise jet fuel prices on the 1st and 16th of every month,
based on the average international price in the preceding fortnight.
Government panel for 0 percent duty on LNG
New Delhi, September 19, 2011 (PTI): A high-level government panel has called for slashing customs duty on
imported liquefied natural gas (LNG) to zero, instead of cross-subsidising the high-priced
imported fuel by making domestic natural gas users pay more. An inter-ministerial committee headed by Planning Commission
Member Saumitra Chaudhuri, in its final report, has recommended that the
import duty on liquefied natural gas (LNG) should be aligned with that
of crude oil, on which customs duty was brought down to zero from 5% in
June. Also, the government should treat LNG/natural gas as a
"declared good", so that they have a common concessional rate of VAT.
"The department of revenue (which was also part of the committee) has
not agreed to the proposal for aligning import duty on LNG with that of
crude. On the issue of declared good status in regard of VAT, the
Department of Revenue did not wish to record a view," the report noted. The panel, which in its draft report a few months back had suggested
averaging out the price of costlier imported LNG with cheaper domestic
gas, did a complete u-turn in its final report by saying the proposal
was not feasible.
Petrol price hiked again depending on VAT and other local levies
NEW DELHI, September 17, 2011: State-run oil companies on Thursday raised the price of
petrol by Rs 3.14 per litre, the third substantial increase since
January, a move which is expected to stoke inflation and upset household budgets.
The decision sparked an immediate protest from UPA partner Trinamool Congress .
Party leader Mukul Roy is reported to have conveyed the party`s opposition to the move to finance minister Pranab
Oil companies had last raised petrol price by Rs 5 a litre on May 15.
Before that, they had twice revised prices in January by Rs 2.50 a
litre. Prices went up marginally due to an increase in dealer margin.
Petrol prices vary from city to city depending on VAT and other local levies.
VAT on cigarettes to 20 per cent from 13.5 per cent in West Bengal
Kolkata, September 2, 2011: The Bengal government today raised the value-added
tax (VAT) on cigarettes to 20 per cent from 13.5 per cent, desisting
from hitting the 30 per cent ceiling permissible after a switch earlier
this week. The tax increase is unlikely to change the price many consumers pay as
it will be largely borne by cigarette manufacturers and wholesalers. But
the increased levy runs the risk of creating an "arbitrage opportunity"
that can encourage smuggling from other states and somewhat blunt the government's drive to generate more revenue.
While presenting the Finance Bill on Monday, finance minister Amit Mitra
had said tobacco products were being put in a schedule that allowed VAT
up to 30 per cent. The new rate, which was not specified then, was notified by the finance department today.
What smokers pay for a pack of the most popular brands is expected to
remain untouched since maximum retail prices are unlikely to be changed.
ITC, which manufactures three out of every four packs sold in the
country, sells all its popular brands at the same rate across the
country, although the VAT rates differ from state to state. However, other players like Godfrey Phillips are likely to raise the
prices of their low-priced brands at the retail level as well. In either case, the VAT increase in Bengal opens up a window of
lucrative opportunity for unscrupulous operators if they smuggle in
cigarette cartons from other states where the same tax is lower.
Supreme Court notice to Centre on RIL natural gas VAT case
New Delhi, August 25, 2011: The Supreme Court on Tuesday issued notice to the centre on a petition
filed by the Uttar Pradesh government challenging an interim order of
the Allahabad High Court staying the levy of Value Added tax (VAT) on
the sale of natural gas by Reliance India Limited (RIL) to various
buyers across the state. A bench of Justice Altamas Kabir and Justice SS Nijjar today sought the
response of the central government on whether sale of natural gas to
various buyers by RIL in the state would come under Central Sales Tax (CST) or the local Value Added Tax (VAT).
Appearing for RIL, senior counsel Harish Salve argued that CST was
already levied by the central government on the gas produced by the
RIL. He argued that RIL cannot be subjected to double taxation involving CST
and VAT. RIL has claimed that the delivery of natural gas from its KG D6 basin in
Andhra Pradesh to various buyers including fertilizer plants across
Uttar Pradesh fell under the central sale. It has claimed that it was
not liable to pay the VAT levied by the Uttar Pradesh state government.
The bench has directed the central government to file its reply within
two weeks on the issue. The bench has also directed the parties involved
in the case such as RIL, Kribio Shyam Fertilizers, Indo Gulf Fertilizers,
IFFCO, Tata Chemicals, NTPC to file their respective rejoinder in another one week thereafter.
The order of the Apex Court came over a petition filed by the Uttar
Pradesh challenging a High Court interim order staying the demand order
on the levy of VAT tax to the tune of around Rs 725 crore on sale of
natural gas by RIL to various companies within the state during April 2009-November 2010.
The state government had on June 6 last year held that RIL was liable to
pay VAT to the tune of Rs 725 crores on the sale of Natural gas to
various companies within the state for the assessing period of April
2009 to March 2010. Earlier on August 16, a bench headed by Justice DK Jain had recused from
hearing the case.
The VAT on e-bikes are highest in Gujarat
Ahmedabad, August 9, 2011: The Gujarat government's Vat percentage is highest on the
environment-friendly e-vehicles. The whopping 14.5 % VAT on electric vehicles has applied brakes on
promotion of these vehicles in the state. While Rajasthan, Punjab and Haryana do not levy any tax on e-bikes and
e-cars, Delhi even offers subsidy on such non-polluting vehicles.
Just because of high taxes, electric car, Mahindra Reva, is not sold in
Gujarat. The electric car which is sold in Delhi for around Rs3.5
lakh, is priced at around Rs5 lakh in Ahmedabad. Because of high taxes, this
e-car is expensive by almost Rs1.5 lakh in Gujarat. So we are not interested in selling the non-polluting car at this high
price, said Pavan Sachdeva, GM (marketing), Mahindra Reva. According to him, Delhi not only levies zero VAT on such vehicles, it
also gives subsidy to buyers. "So Reva is sold in the range of Rs2.8
lakh to Rs3.5 lakh there," he said. If VAT rate is brought down in Gujarat, the sale of
non- polluting vehicles will get a boost in the state, which will also check the emission levels."The taxes on e-bikes are highest in Gujarat. This is a state where sale
and use of such vehicles can be good, so if taxes are brought down, that
will greatly help their promotion," said CEO of Hero Electric, Naveen
Munjal. For more than a year, the association of electric two-wheelers
and four wheelers has been writing to Gujarat government for reducing
the VAT rate. "If state government cannot make it tax free, then it can
reduce VAT from 14.5% to at least 4%. But in spite of several letters,
there is no response from the government," said Sachdeva.
Some fear that the government is not bringing down the VAT as it is
afraid that other automobile companies may start demanding relief in
taxes. "When we approached the government to reduce VAT on e-bikes, the
answer we got was 'other two-wheeler manufacturers would demand the
same','' said Jaysukh Patel, managing director of Ajanta Group, which makes Oreva e-bikes. Patel said that in Rajasthan, Delhi, Haryana, Punjab and Chandigarh, VAT
on electric vehicles is zero. "Maharashtra, MP, UP and Karanataka levy
4% VAT on e-bikes. Tamil Nadu and Kerala levy tax of 12.5%. But Gujarat
is the only state in the country, where VAT rate is 14.5%, which is
highest in the country," said Patel. The director of Electrotherm Ltd,
Shailesh Bhandari, believes if other states can levy zero tax, Gujarat
can certainly bring down the rate. "VAT in Gujarat is the highest in the country," he said. Source: DNA
Implementation of GST will boost India's growth: Assocham
NEW DELHI, August 04, 2011 (PTI): The implementation of goods and services tax
(GST) could boost the country's GDP by about 2 per cent annually, industry body Assocham
said on Wednesday. "GST could increase GDP growth rate by 1.4 to 1.7 per cent with an
annual revenue increase of Rs 1.2 lakh crore at current level," it said.
At present, the gross domestic product (GDP), which is the sum of total
goods and services produced in a year, is over $1 trillion (Rs 58.68 lakh crore).
Introduction of GST, which will subsume central and state taxes like
excise, customs, service tax, sales tax and VAT, has been pending for
years in the absence of political consensus. GST Constitution Amendment
Bill is pending before Parliament.
The main concern of the Opposition-ruled states is that the new tax
regime would erode their autonomy to levy taxes. Assocham said the GST will create a single Indian common market with
supply chain efficiencies and scale up the economy.
VAT on tobacco products in Rajasthan is highest in India
Jaipur, August 02, 2011: An effort by the Rajasthan government to curb tobacco addiction in the
state by doubling Value Added Tax (VAT) on tobacco products seems to
have gone up in smoke. In an indication of the blackmarket rampant in
tobacco in the state, in just two operations recently, the Commercial
Taxes Department has recovered close to Rs 1 crore in taxes and penalties from traders, while around hundred cases are presently under
"We received information that tobacco products were being transported
from neighbouring states where VAT is lower. In April we recovered Rs 49
lakh from 96 centres and in June Rs 47 lakh from 81 centres,?" Commercial
Taxes Deputy Commissioner (Anti-Evasion) Gyana Ram said. While VAT on tobacco products is 40 per cent in Rajasthan, probably the
highest in India, in neighbouring states like Haryana, Madhya Pradesh
and Punjab, it is around 20 per cent.
Haryana govt to exempt kerosene oil of Public Distribution System from
Haryana, July 28, 2011 (PTI): Haryana cabinet gave ex-post facto approval to the decision of the
government to exempt kerosene oil being sold through the Public Distribution System from VAT. The decision to exempt kerosene oil from
VAT was taken after a request in this regard was made by the Centre to
reduce the burden of price rise on common man. The state has already
done away with tax on domestic LPG and its rate of tax on diesel is the
lowest in the country, an official spokesman said. The decision to
revise the rates of toll tax on Gurgaon-Sohna-Nuh-Alwar Road has been
necessitated to discourage the vehicles on NH-8 taking diversion to this road and for better revenue.
The commuters are using Gurgaon-Sohha-Nuh-Alwar Road as an alternative route to save heavy toll
being charged by National Highway Authority of India on NH-8. As the
Gurgaon-Sohna-Nuh-Alwar Road (upto Rajasthan Border) has recently been
improved at a cost of Rs 347.87 crore, there would be further tendency
of tollable vehicles to use this road as an alternative route, he said.
It was, therefore, decided that the rates of toll tax should be made
applicable immediately and these be increased to 1.5 times from this
VAT hike on mobiles could bolster grey market sales in TN
Chennai, July 24,2011 (PTI): John Yesudass, Chairman of Wireless Gadgets India, makers of
'Techberry' brand mobile phones said, "We were earlier charging four per cent tax.Now we are absorbing increase in VAT. We do not want to increase the
cost of mobiles." The increase would only result in customers buying
products from neighbouring states where VAT is only four per cent, he
said. According to ICA, Tamil Nadu witnessed a 10.5 per cent growth in
2011-12, generating revenues of Rs 2,375 crore. VAT revenue in mobile
phones at four per cent for this period was Rs 95 crore, growing at 10
per cent per annum, it said. Mohindroo said the 14.5 per cent VAT would
see a dip of 67 per cent in legal sales of mobile phones (phones sold
with bills) at Rs 780 crore, compared to the previous year. However, the
grey mobile phone market would see sales grow from almost nil to Rs
1,820 crore in the same period, he said. He warned of a serious dent on
the mobile manufacturing and components industry sector in Tamil
Nadu, now considered a "hub". "Mobile phones cater not only to the Indian
market, but also to the world market. Our efforts to promote growth of
the industry and build the industry for parts and components may get
nullified" (with this additional VAT), he said.
Finance Ministry plans to bring more services under the tax net
MUMBAI, July 19, 2011 (PTI):The Finance Ministry plans to bring more professions in the
services sector under the tax net, a senior bureaucrat said here on
Monday. He was speaking at a service tax-related event organised by the
Associated Chambers of Commerce and Industry of India.
"More areas in the services sector need to be brought under service tax.
In India, this is tougher to do, because goods are sometimes classified
as services and vice versa. The Centre has shown commitment to implement, which will subsume most of the indirect taxes as well as VAT
on the state front, besides local levies," Ministry of Finance Joint
Secretary V K Garg said.
CM urged to exempt VAT for cotton textiles for two years
Coimbatore, July 13, 2011 (PTI) Southern India Mills Association (SIMA) today
appealed to Tamil Nadu Chief Minister, Jayalalithaa to exempt or provide
optional route, as prevails in the case of Central Excise, for raw
cotton and cotton textiles, right from yarn to finished goods from VAT
for a period of two years. The increase in VAT rate on raw cotton from
four to five per cent would discourage any cotton development in the
State, as it was expensive for the mills, as the CST was only two per
cent, SIMA Chairman, J Thulasidharan said in a press release here.
Moreover, one per cent Market Committee Fee on cotton and cotton waste
was also an additional burden to the textile mills in Tamil Nadu, he
said. Spinning mills in Tamil Nadu were in a disadvantageous position
due to the absence of raw material base, incurring Rs four to Rs five
for bringing cotton from states like Gujarat, selling over 60 per cent
of yarn in upcountry by spending equal amount for transport, he said.
Huge spinning capacity being created in the cotton growing states was
also threatening the very survival of the mills in Tamil Nadu, Thulasidharan said.
Ice cream makers form association seeking reduction VAT
Mumbai/ Ahmedabad July 11, 2011: In a bid to increase consumption and enhance quality standards, ice
cream manufacturers' in the cooperative and private sectors of India
have got together to form the Indian Ice Cream Manufacturers'Association
(IICMA). Based out of Ahmedabad, the 80 member strong association was formally
launched on Saturday after getting registered with the Registrar of
Companies. "All small, medium and large ice cream players have come together to
form the association. The move was driven by the need to promote ice
cream consumption and upgrade the product quality," said Rajesh Gandhi,
president, IICMA and managing director, Vadilal Industries Ltd.
With the new association of ice cream makers formed, the industry will
now be working towards seeking better measures including reduction value
added tax (VAT). "Recently government added one per cent excise duty,
over and above the VAT. Ice cream in India is considered a luxury and
taxed highest. In Gujarat there is a 15 per cent levy of VAT on ice
cream. In other countries, there are no tax on food item like ice cream.
In India, it requires this attention," said Gandhi.
According to Gandhi, the ice cream market in India is estimated at Rs
2,500 crore in the organised sector growing at 20 per cent. The per
capita consumption is around 300 ml per annum in India while it is 700
ml in Pakistan, three litres in China and 22 litres in developed
countries like the USA, Japan, Germany and others.
Bihar Government makes foodgrains free of VAT
PATNA, July 7, 2011: Deputy CM Sushil Kumar Modi said that the VAT on foodgrains like rice,
wheat, pulse and flour has been fully withdrawn. "When our government
came to power in 2005, the VAT on these commodities was four percent
which we reduced it to one percent in 2006. Now in view of the escalating prices of essential commodities, we have decided to do away
with VAT on them," he said. He added that with this relaxation, about
5,000 small and medium traders dealing in foodgrains whose annual
turnover is up to Rs 100 crore will be benefited.
Meanwhile, the food and consumer protection department has suggested
that the Centre provide cash instead of foodgrains to the ration card
holders under the proposed National Food Security Act (NFSA). Food and
consumer protection minister Shyam Rajak said that this suggestion has
been sent to the Centre in response to the state's opinion sought on the
NFSA. The Centre is working on a draft Bill that will be placed before
the Empowered Group of Ministers on food. It aims to provide legal right
over highly subsidized foodgrains to 68 percent of the country's population.
Meghalaya reduces VAT on LPG, kerosene and diesel
SHILLONG, July 4, 2011: Meghalaya exempted Value Added Tax (VAT) on
cooking gas, kerosene and diesel to provide relief to consumers.
With this decision, Meghalaya joins a handful of other States and Union
Territories in India like West Bengal, Haryana and Delhi which had
earlier reduced VAT on some of these products. The State VAT on LPG and
kerosene is five per cent and diesel 12.5 per cent. The decision to reduce VAT on these items was taken by the Cabinet
after the UPA Government raised prices of these products on June 25.
The Ministry of Petroleum and Natural Gas increased the price of
Liquefied Petroleum Gas or cooking gas by Rs 50, kerosene Rs 2 and
diesel by Rs 3 per litre due to spill over effect of increase in price
of crude oil in the International market. The Cabinet's decision would provide relief to the extent of Rs 20.13
paise per domestic cylinder of LPG, Re 0.67 paise per litre in respect
of Kerosene and exemption of Rs 0.50 paise per litre of diesel.
Orissa waives VAT on LPG, PDS kerosene
Kolkata/ Bhubaneswar/ Berhampur June 29, 2011: To reduce the impact of hike in prices of
petroleum products on the people in the state, the Orissa government has decided to waive four per
cent Value Added Tax (VAT) on LPG and kerosene supplied through the
Public Distribution System. "As you are all aware, the Government of India has hiked the prices of
petroleum products. This has given a blow to the people of the country,
especially the middle and low income groups. As a measure of relief, my
government has decided that VAT will be completely waived on LPG and PDS
kerosene. This is the maximum relief that the state can offer to the
people?, Chief Minister Naveen Patnaik told mediapersons. The VAT exemption on LPG and PDS kerosene would mean a relief of Rs 16
per LPG cylinder and a burden of Rs 40 crore per annum on the state exchequer.
He, however, ruled out the possibility of a further cut in VAT on diesel.
"As far as diesel is concerned, the state government has already brought
down the VAT on diesel to 18 per cent some time back, one of the lowest
in the country. It would not be possible for a poor country like Orissa
to bring it down further. I urge upon the Government of India to reduce
diesel prices so as to bring some relief to the people?, Patnaik said.
Meanwhile, petrol stations in several parts of the state were forced to
close their shutters for about two hours when the supporters of BJP's
youth wing staged demonstration at the filling stations. The activists of Bharatiya Janata Yuba Morcha (BJYM) closed the filling
stations as a part of their state-wide economic blockade, protesting the
recent hike in prices of petroleum products.
Source: Business Standard"
Maharashtra won't decide on LPG, charges 23 per cent VAT on diesel
Mumbai June 27, 2011: The Congress-led government in Maharashtra is not in a hurry to respond
to the party high command?s call to reduce taxes levied on diesel and
LPG cylinders. Instead, Chief Minister Prithviraj Chavan and his deputy,
Ajit Pawar, clarified that any decision would be taken by the state
cabinet only after carefully looking at the necessary numbers.
The Maharashtra government does not levy value added tax (VAT) on LPG
cylinders but charges 23 per cent VAT on diesel. Of the total collection
of sales tax/VAT of Rs 42,000 crore in 2010-11, about Rs 3,500 crore was
through the VAT on diesel. There are about 3,300 petrol pumps in the
state whose monthly diesel sale is about 600,000 kilolitre and 250,000 kilolitre of petrol.
Pawar, who belongs to the Nationalist Congress Party, a key ally of the
UPA at the Centre, clarified that in his budget for 2011-12 he had
spared LPG from VAT. "There is no VAT on LPG cylinders. However, in the
case of VAT on diesel, the government will examine."
On West Bengal Chief Minister's decision to cut four per cent VAT on LPG
cylinder, saving Rs 16 for the Bengal consumer, Pawar said West Bengal
could not be compared with Maharashtra. "West Bengal was charging four per cent VAT on LPG cylinder which will
not be collected. This would effectively put the burden of hike at Rs 34
and not Rs 50 on consumers in West Bengal," he noted. Ravi Shinde, president of Petrol Dealers Association, Mumbai, said the
government?s decision to increase diesel prices would put additional burden on auto fuel dealers.
Bank employees hold massive rally to reduce the highest VAT in Punjab
PATIALA, June 24, 2011: A massive rally was organized here in front of the State Bank
of Patiala head office by various unions of employees. The road was blocked for two
hours to lodge protest against the price hike of petrol,
privatisation, un-employment, corruption and other issues concerning common man.
While addressing the rally, N K Gaur, vice-president, All India Bankers
Employees Association, urged the Central government to withdraw the recent hike in petrol
prices and also urged the Punjab government to reduce the highest
VAT levied on petrol which has resulted in Rs 7 per liter extra cost of petrol prices than other states.
Nirmal Singh Dhaliwal, state general sectary of AITUC said that all the
central trade unions organized a country-wide chaka jam on Thursday in
protest against the LPG policies, violations of labour laws, to abolish
the contractual and outsourcing system of employment, price rise,
retrenchment and repression on the trade union struggles.
Gujarat to raise Rs1,000 crore via securities sale
Gujarat, June 21, 2011 (DNA): The state government on Monday announced sale of Gujarat
Government Stock (Securities) worth Rs1,000 crore for a tenure of 10 years.
A finance department release said that the sale is being undertaken to
fund capital expenditure on development programmes, particularly on
schemes included in the Annual Development Plan for 2011-12. The release said that there has been a consistent increase in revenue
income of the state over the years. Implementation of VAT and other
fiscal measures have contributed to this. The state government has also said that it is committed to zero revenue
deficit and to contain fiscal deficit to 3% of the Gross State Domestic
Product (GSDP). The fiscal deficit of the state was 3.53% in 2009-10 and
3.11% in 2010-11. It is projected to be 2.43% in 2011-12. As against revenue deficit of 1.62% in 2009-10 and 1.08% in 2010-11, the
state government has estimated 0.08% surplus budget in 2011-12.
Cut import duties on automobiles, components: Ratan Tata
New Delhi, June 13, 2011 (PTI): At a time when the Indian automobile industry is strongly opposing
lowering of import duty in the proposed India-EU FTA, Tata group chief
Ratan Tata has favoured cutting tariff on vehicles and components coming
from overseas. In an interview to the market research firm JD Power, Tata said such
high import duties are unrealistic and create an artificial barrier of protection for local companies.
He also said India does "not have an automobile industry" as "we have
assemblers of foreign brands" and only Mahindra & Mahindra and Tata
Motors actually develop and manufacture products in the country.”
“I also think that very high rates of import duty should be reduced.
They're unrealistic and create an artificial barrier to protect the
manufacturers in India," Tata said. Similarly, the import duty on components should dramatically reduced so
that manufacturers based in India can source components at affordable rates, he added.
The Indian automobile industry, primarily the homegrown makers, are
strongly opposing lowering of import duty in implementing the
India-EU FTA saying that it will threaten the competitiveness of domestic firms.
Components players are also of the view that reduction of duties will
lead to dumping of products in India. At present, a fully-built vehicle attracts a customs duty of 60 per
cent, which finally comes out to be around 110 per cent after considering sales tax, VAT and other levies. For pre-assembled engines,
transmissions and gearboxes, customs duty is fixed at 30 per cent. Other
auto parts attract a customs duty of 10 per cent. On the domestic industry, Tata said: "We really don't have an Indian
automobile industry. We have assemblers of foreign brands, and most of them are here in one form or another.
“Only Mahindra and Tata Motors actually manufacture and develop vehicles
in India. As a result, the auto industry in India today is, therefore, a
hybrid of several assembled foreign vehicles and a relatively small
range of indigenously developed products." He said to become a "truly Indian industry", it is necessary to set up
engineering facilities here, and then design and produce vehicles
specific for the country. "I would expect to see considerable growth in
the industry by 2020. Hopefully, it would benefit Indian players like Mahindra and Tata Motors and help expand market share," he added.
Protest against VAT by cross LoC traders in J&K
SRINAGAR, May 28, 2011: Cross Line-of-Control (LoC) traders today held a protest here
demanding revocation of Value Added Tax (VAT) on trade between two parts
of the divided Kashmir. "As per the VAT Act, sellers and buyers should be in the state control,
where as the sellers and buyers of Pakistan Occupied Kashmir (POK) are
not in control of the J&K government. PoK dealers cannot register their
firms under VAT," General Secretary of Salamabad-Chakoti Traders Unions
Hilal Turki said. He said keeping in view the ground situation, VAT should not be imposed on the cross-LoC trade.
The traders had earlier suspended the trade for past eleven weeks in
protest against government's decision. The traders also put forth seven other demands including increase in the
number of trading commodities from present 14 items by convening a
meeting of traders from both sides of LoC. Source: Economictimes
Soft-drink major hikes prices on rise in VAT
Mumbai, May 23, 2011: Soft-drink major Coca-Cola has hiked
prices by up to five per cent in at least two major markets such as Maharashtra and Delhi.
This is the second price increase being done by the company in the last
two months. In April, the firm that sells Thums Up, Sprite, Fanta and
Maaza, had hiked prices of its aerated beverages by up to nine per cent
due to surging packaging and transportation costs. After the price hike, a 1.25-litre bottle of Thums Up is now available
for Rs 39, up from Rs 37. Prices of 200 ml bottles of Sprite, Maaza and
Limca are up by Rs 1 from Rs 9. The company has also increased prices of
its two-litre bottles of Sprite and Thums Up to Rs 63 from Rs 60.
The Indian subsidiary of the US cola giant blames increase in the value
added tax (VAT) levied by state governments of Maharashtra and Delhi for price hikes.
The state value-added tax (VAT) has increased to 20 per cent from 12.5 per cent earlier, said senior Coca-Cola India officials.
When contacted, a Coca-Cola spokesperson confirmed the development and
said the firm had increased prices of select packs of all its carbonated
beverages. “Rising VAT has forced our bottling partners to undertake
marginal price increase on certain packs in Maharashtra. Providing
consumers with choice and value continues to be the cornerstone of our business strategy,” said the spokesperson.
With the cola majors failing to persuade the state government to roll
back the VAT hike they may be forced to pass on the increase in costs to
consumers. Coke seems to be taking advantage of its strong franchise to
take the lead in this area, said another expert. Coca-Cola has also been battling rising transportation costs as a result
of the price hike in auto fuels like LPG, diesel and petrol. The cost of
plastic polymers, which goes into making the transparent polyethylene
terepthalate (PET) bottles, too, has been on an upswing.
Branded garments in for more relaxations
Mumbai, May 09, 2011: The government proposes some more relaxations for the branded garments
sector, besides enhancement of duty abatement from 40 per cent to 55 per cent.
One of the major relaxations proposed for the sector is exemption to job
workers who work for brand owners in India. This category may not be
required to pay 10 per cent excise duty, which the government imposed on
branded garments in the Union Budget 2011-12.
Second, branded school and corporate uniforms and materials may also be
exempted from excise duty. "This means any branded uniform or blankets,
quilts, etc for schools, colleges, hotels, airlines or for any other
industry is likely to be exempted from payment of excise duty," explained an official source.
Third, documentation and procedures for availing exemption from excise
duty for small-scale industries may be simplified. Sources said excise
officials might not inspect documents. Rather, mere certification from a
chartered accountant or documents submitted for value added tax (VAT)
and VAT credit would be sufficient to claim excise exemption. The finance ministry had imposed 10 per cent excise duty on branded
garments in the last Budget but later decided to enhance the cut-off
limit of industries for excise payment. This was done by increasing the
turnover limit eligible for seeking exemption by allowing duty abatement
from 40 per cent to 55 per cent but only for 2011-12. With this relief,
a unit would be eligible for SSI exemption in 2011-12 even if it had a
turnover based on retail sale of Rs 8.9 crore in 2010-11. Besides excise duty imposition, the sector, however, received a slew of
benefits, from reduction of custom duty on various chemicals used for
manufacturing of synthetic textile to reduction of excise duty on
textile machinery. Also, basic customs duty on raw silk of all grades
had been cut from 30 per cent to five per cent and specific tariff rate
of 10 per cent had been prescribed for jute yarn, while it was exempted
from excise duty. Textile items have been exempt from additional duties
of excise under the Goods of Special Importance Act, 1957. Source: Business Standard
Gujarat cuts tax on aviation fuel
AHMEDABAD, May 5, 2011: Gujarat government has sharply reduced tax on aeroplane fuel
for flights operating within the state to encourage intra-state aviation. Value-added tax on Aviation Turbine Fuel was cut from 30% to
4% for all non-scheduled flights days after the state roped in Capt
Gopinath-led Deccan Charters to start intra-state aviation service. An
aviation policy is in the works, a state official said. Corporates operating own flights in the state can now save up to 20% on
fuel costs. Fuel cost constitutes around 40% of the total operating cost
of an airline. Business groups like Adani, Reliance, Essar, United
Phosphorous, Sterling, Electrotherm among others regularly use own planes in the state.Aviation experts say the decision will boost business travel and tourism
within the state. Gujarat is among the top three states that attract highest domestic investments. "Scheduled flights are already getting the benefit of lower VAT on
ATF. Now the same rate is applicable to non- scheduled flights," said Vipul
Mitra, principal secretary in the state aviation and tourism department.
The finance department has also given its nod to the aviation department's move. Source: The Economic Times
Tripura set to increase VAT
Tripura, April 25, 2011 (UNI): To manage the financial crisis Tripura government has
enhanced the Value Added Tax (VAT) schedules that would lead to price
hike of all essential commodities, including fuel. However, the Opposition has demanded to roll back the decision.
Tripura had been suffering from the loss of more than Rs 1000 crore at
the beginning of financial year 2011-12 due to awarding of less funds by
13th Finance Commission (FC) as compared to the state’s demand, a government report said. According to officials' estimate the state would be able to earn an
additional revenue of Rs 55 crore with the hike of fuel price that would
increase the internal revenue to Rs 598 Cr, which was Rs 470 Cr in last
TRAI bats for domestic tele gear makers
New Delhi, April 15, 2011: Despite being the fastest growing telecom market in the world, domestic
manufacturers account for only 12% of the total equipment required in a
network. Now, in a boost to domestic firms, the Telecom Regulatory
Authority of India (TRAI) has come out with a policy to boost home production. TRA
The regulator has also proposed limiting excise duty and VAT
(value-added tax) on indigenously manufactured products to 12% and a
deferment of excise, CST (central sales tax), VAT and GST (goods and
services tax) for a 5-year period for local companies with sales of less` than R1,000 crore.
Traders buying wheat from UP, Rajasthan on
Punjab's high VAT
Chandigarh, April 11, 2011: The total tax paid by a private trader in Punjab works out to 14.5
per cent With Punjab raising Value Added Tax (VAT) on wheat purchase from 4 per
cent to 5 per cent. Due to higher VAT on whet private traders have decided to go to Uttar Pradesh
and Rajasthan to purchase wheat.The total tax paid by a private trader in the state works out to 14.5 per cent.
Assocham wants Uttar Pradesh government to decrease VAT on cigarettes
March 25, 2011: Associated Chambers of Commerce and Industry of India (Assocham) has
urged the Uttar Pradesh government to iron out Value Added Tax (VAT) rate on cigarettes and
fix it at 12.5 per cent .The body said such tax divergence among states promoted unhealthy trade
practices and encouraged smuggling of goods.
Uttar Pradesh government had recently hiked VAT on cigarettes to 13.5 per cent along with 5
per cent other state levies like octroi. Assocham lamented this was in
spite recommendations of the central empowered committee of state
finance ministers in January 2005 to maintain a general VAT rate of 12.5
per cent on cigarettes. "This divergence in VAT rates will lead to large-scale smuggling,
evasion of taxes and other criminal activities," Assocham national
secretary general D S Rawat wrote in his letter to chief minister
Mayawati. The chamber has recommended a uniform VAT rate on cigarettes would
encourage legitimate sales of cigarettes thereby increasing state
revenue. It would also be consistent with the principles of VAT and
proposed Goods and Service Tax (GST) regime. Assocham opined that disparity in VAT rates would distort the market
leading to illegal activities like smuggling, tax evasion and breeding
ground for the entry of organized crime syndicates.
Aluminium utensil makers befuddled over Excise duty
New Delhi/ Chandigarh March 22, 2011: Imposition of excise duty on utensils has not augured well for the
utensil manufacturers in the region, with the industry being befuddled over the decision.
Federation of All India Aluminium Utensil manufacturers President Bharat
Garg maintained, levying of 1 per cent Excise duty on aluminium has left
the industry confused. In the Union budget 2011-12, of the 370 items which were exempted from
Central Excise Duty but chargeable to Value Added Tax, 130 items have been brought under 1 per cent Excise duty.
Representatives from the aluminium utensil industry are not impressed
with inclusion of utensils under the Excise ambit. Members of Aluminium Utensil Manufacturing Association Jagadhri
(Haryana) also maintained, while 370 items as mentioned in the budget
speech are taxable under VAT, prejudice should not have been done with select items.
Delhi fuel retailers pitch for lower VAT on diesel
NEW DELHI, March 15, 2011 (PTI): The Delhi Petrol Dealers Association (DPDA) has requested the
state government to reduce Value-Added Tax (VAT) on diesel to 9 per cent
from 12.5 per cent at present, in line with the neighbouring state of
Haryana. "400 petrol dealers of Delhi are seeking parity in VAT with Haryana in
the coming Delhi Budget for the year 2011-12 so that smuggling of diesel
can be checked," DPDA Vice-President Nishit Goel said in a statement. The Delhi government, led by Chief Minister Shiela Dixit, is scheduled
to table the Budget in the Assembly on March 22.Due to the Rs 1.25 differential between the price of diesel in Delhi and
Haryana, most transporters and taxi fleet owners prefer to buy more
polluting Euro 3 Diesel from Haryana pumps rather than the eco-friendly
Euro 4 diesel available in the capital, he said.
Over 75 Percent of Mobiles Sold Without VAT in India
New Delhi, March 14th, 2011: The Central Board of Direct Taxes (CBDT) released a
statement on March 13, 2011 saying that a series of raids have been conducted on several
mobile phone retailers around New Delhi who were selling phones which
were not properly registered and are considered to be a potential security threat.
According to the CBDT, retailers have been importing mobile phones which
do not have the legally required International Mobile Equipment Identity
(IMEI). The devices were predominantly imported from China. No records
are made of the phones as they enter the country, and they are sold to consumers with no Value Added Tax (VAT) charge.
The CBDT raided 59 separate retailers across New Delhi, and found
evidence of INR 2.3 billion (approx. USD 50.84 million) of unpaid VAT.
Tax authorities have already closed the stores of some retailers who
were found to be avoiding VAT levies or selling illegal handsets.
According to the Indian Cellular Association (ICA) approximately 30
percent of the handset sold in New Delhi are imported from China with no
EMEI, and sold with no VAT charge. High-end phones are even more likely
to be sold without a VAT levy, with nearly 75 percent of phones costing
above INR 10 000 (approx. USD 220) are sold without paying taxes.
Customs data shows that nearly 7.3 million phones were imported into
India in 2009, through the New Delhi Airport alone, and logistic
difficulties and it is impossible to verify the EMEI number of each device.
After 54 years, states free to levy VAT on sugar and textiles
Mumbai March 4, 2011: The Union government has allowed the states to impose tax on sugar and
textiles for the first time in 54 years. In his Budget, the finance minister proposed to amend the Additional
Duties of Excise (goods of special importance) Act, 1957, and decided to
remove sugar and textile from its schedule. After this amendment, states
are free to levy value added tax on these commodities after 54 years.
These commodities were put under the scheduled commodities, with the
enactment of the Additional Duties of Excise Act in 1957 by the Nehru
government. Earlier, the Centre could only levy this tax on these commodities.
Due to the amendment, the Centre has given back these powers to states,
which are scouting for revenues, post implementation of the goods and
service tax. "States will be free to levy VAT on them once the finance Bill is signed
by the President and it comes in force," said Dilip Dixit, senior
advisor, Tax & Regulatory Services, Indirect Tax, KPMG. However he
feels, "It is unlikely that any state government will do so in the near future."
The tax on these commodities could be a maximum of five per cent.
At present, about 16 commodities are notified as declared goods. These
include coal, cotton, cotton yarn, crude oil, hides and skins, iron and
steel, jute, LPG for domestic use and oil seeds. The amendment will be
effective after passing of the Finance Bill. Source: Business Standard
Eye on GST, govt prunes exemption list
New Delhi, March 1, 2011: To prepare the ground for the introduction of the Goods & Services Tax
(GST), Finance Minister Pranab Mukherjee has proposed to prune the
excise duty exemption list by levying a nominal central excise duty of
one per cent on 130 items currently enjoying exemption. He also proposed to enhance the lower rate of central excise duty from
four per cent to five per cent, saying most states had increased their
merit rate of Value Added Tax (VAT) from four per cent to five per cent.
The proposals relating to excise and customs are estimated to result in
a net revenue gain of Rs 7,300 crore to the government, against a loss
of Rs 11,500 crore from the proposals on direct taxes. Most of this gain
will come from excise duty measures, as the government is trying to minimise exemptions.
At present, there are as many as 370 goods that enjoy exemption from
central excise duty but are chargeable to VAT by states. The exempted
130 items are mainly consumer goods like food items, mobile phones and
compact discs. No Cenvat credit will be given for manufacturing these items.
Basic food and fuel, precious metals and stones would continue to enjoy
exemption. In case of jewellery and articles of gold, silver and
precious metals, the levy would apply only to goods sold under a brand
name. The remaining 240 items would be brought into the tax net when the
GST is introduced.
Record VAT and sales tax revenue in UT
CHANDIGARH, February 21, 2011: Owing to consistent enforcement of excise and taxation
operations against transporters, and statistical notices to at least 200
city-based defaulting shopkeepers and traders, the administration has
been able to generate a record value added tax and sales tax (VAT-CST)
revenue of Rs 886 crore this year. Being the highest figure in the last five years and an increase of 30%
over last year, it is also said to be the per capita highest tax
received in the country this year.
There are as many as 13,000 VAT dealers across the city, many of whom
had been regularly avoiding VAT payments. By end of March-end, the
department expects to a VAT revenue of Rs 1,000 crore.
ASSOCHAM has called for inclusion of natural gas with uniform VAT across the country.
February 17, 2011: ASSOCHAM has called for inclusion of natural gas
in the list of declared goods under section 14 of the Central Sales Tax
Act with reasonable and uniform value added tax across the country.
VAT laws of some states restrict availing input tax credit if natural
gas is used as fuel and fertiliser feedstock. After the introduction of
VAT from April 2005, natural gas was kept under revenue-neutral rate of 12.5%. The Associated Chambers of Commerce and Industry of India said that in
Rajasthan it is levied at 5% under industrial input but some states are
levying sales tax at 20%. Natural gas has emerged as a clean and energy-efficient resource, a key
industrial input and the most preferred fuel due to its environment-friendly nature. The fertiliser and power sector consume
over 70% volume of natural gas available in India. Due to high rate of sales tax or VAT coupled with entry tax and many
restrictions with regards to availing input tax credit, the consumers
get adversely affected, said ASSOCHAM in pre-Budget memorandum for 2011-12.
High VAT deters growth of Punjab food processing units
Delhi. February 15, 20011: The food processing units scattered across Punjab are languishing due to
high tax structure framed by the state government. The units engaged in manufacturing of bakery products, branded rice
processing and wheat processing are in a tight squeeze due to a value
added tax (VAT) of 13.5 per cent. The state government had imposed a 10
per cent surcharge on VAT in the recent past and the industry has been
sending its delegations to the state government to withdraw this in the coming budget.
According to All-India Bread Manufacturers Association President Ramesh
Mago, "The food processing industry in Punjab could have proliferated
due to availability of plenty of grains and green vegetables but the
adverse tax structure has undermined the growth of this industry". He
added, there is no VAT on this industry in Uttar Pradesh and Himachal
Pradesh so they cannot export their products into other states. At the
same times, the manufacturers in the neighbouring states have the
advantage of selling the same in Punjab due to the lower cost. He apprised, many small manufacturers have cut down their production due
to non-viable business proposition.
According to CII Punjab State Council President and Mrs Bectors Foods
Specialities Limited Deputy Managing Director Akshay Bector, the
estimated size of the food processing industry in Punjab is in a range
between Rs 800 crore and Rs 1,000 crore. Except for half-a-dozen big
players, mostly there are small and medium units. He said, the sweets are exempted from tax and dry fruits are charged
four per cent VAT. So, it is not conducive for the state to charge
cheaper goods with higher VAT in the state and allow the neighbouring
states to earn profit. Source: Business Standard
FM must accept FIEO's proposals
New Delhi, February 7, 2011: The new president of the Federation of Indian Export Organisations
(FIEO), Ramu Deora, has presented some useful points before the finance
minister in his pre-Budget memorandum. Some of these are workable.
The essential thrust of the presentation is that simplification of
procedures, reduction in paperwork, clarity on policies, quick decisions
on litigations, reduction in transaction costs, quicker refunds and a
greater coordination between various government agencies will not only
help exporters exceed the targets for the current year but also exceed
the target for the 2009-14 period by over 25 per cent. In fact, most of
these suggestions do not cost money but only call for responsive administration.
FIEO has highlighted the problems caused by malfunction of Customs EDI
systems and plethora of paperwork despite on-line facilities. Difficulties in getting refund of service tax and refund of accumulated
Cenvat Credit are problems that have not received adequate attention.
Huge claims are held up on frivolous objections of purely technical
nature. Deora wants service tax refunds to be handled through All
Industry Rate of Drawback, a single rate for customs, excise, VAT and
service tax and a single Customs/excise bond covering all eventualities instead of bond for each transaction.
FIEO wants continuation of income-tax exemption for export-oriented
units, income-tax concession for units exporting more than 75 per cent
of the production and waiver of TDS (tax deducted at source) for
commission to foreign agents. Source: Business Standard
Himachal Pradesh increase VAT on tobacco items
Shimla, February 4, 2011: Himachal Pradesh Voluntary Health Association (HPVHA) hailed
the decision of Himachal Pradesh Cabinet for increasing VAT on tobacco
Products from 13.75 percent to 16 pc. The Global Adult Tobacco Survey India 2009-10 conveys that about 21 pc
(equals 1276222 persons) population of this hill state is using tobacco
product in one or the other of its form, consuming 18 pc of total
tobacco production, which is higher than that of the average tobacco
users in Northern India. To be precise, Himachal Pradesh has 18.1 pc of
the male population of 15 years and above, who are daily-users of
tobacco products as compared to the average of 16.5 pc in the Northern India.
The decision of the cabinet is to impose uniform taxation i.e. 16pc on
all the tobacco products – cigarettes, cheroots, cigars, bidis, oral
tobacco products-. Earlier, the tax on bidis was less, i.e. 4 pc only.
It meant a loss of Rs1.94 crore annually to the state government. The
total expenditure of the population of Himachal Pradesh on Bidis
annually is Rs16.21 crore. VAT collected at the rate of 4 pc on it meant
revenue of Rs65 lac only. With VAT increased to 16 pc, the revenue will go up to Rs.2.59 crore.
Plea to waive VAT by Traders in Ranchi
RANCHI, January 30, 2011: Social organisations used Mahatma Gandhi's death anniversary,
observed as Martyr's Day, to highlight their long-pending demands and draw the attention of the
people in power towards the causes.Traders in Ranchi distributed rose buds to the
commuters on Main Road with a small card that appealed to the government
to repeal VAT on cloth and blanket. The card reads "Kadpe se VAT wapas
lo" (waive value added tax from cloth). Traders organised a small
awareness programme and announced to intensify stir if items like
bedsheet, towel and pillow covers were not freed from VAT.
Consensus on goods and services tax may take time: Pranab Mukherjee
New Delhi, January 24, 2011 (PTI): Finance minister Pranab Mukherjee today said the Centre is working at a
"political level" with states for countrywide roll-out of goods and
services tax (GST), but it may take some time to arrive at a consensus
on the new indirect tax regime. "I am hopeful that it would be possible to achieve the success in
bringing the consensus though it may take some time," Mukherjee told reporters here.
Once implemented, GST will subsume indirect taxes like excise duty and
service tax at the central level and VAT on the state front, besides
other local levies. "At the political level, we are working on it (GST) to evolve the
consensus in close cooperation with the Empowered Committee of State Finance Ministers," Mukherjee said.
The Centre has proposed a three-tier GST structure. As per the proposal,
GST will be levied at two rates on goods --a concessional 6 per cent on
essential items and 10 per cent for others -- while services will
attract 8 per cent GST. These will be collected by both the Centre and
the states. The original deadline of April 1, 2010, for roll-out of GST has already
been missed and the Centre has said it will make efforts to roll it out
from April 1, 2011. However, due to the lack of consensus between the
Centre and states on the issue, it is likely this target will also be missed.
The proposal for roll-out of GST, touted as the most significant
indirect tax reform since the introduction of state-level VAT, has been
hanging fire on account of persisting differences between the Centre and
states on the GST Constitution Amendment Bill. Amendment of the Constitution is required to enable the Centre to impose
tax on activities other than manufacturing and for the states to levy
service tax, under the GST regime.
People want govt to slash VAT on fuel
JAIPUR, January 18, 2011: The de-regulation of petrol prices
has introduced people to a regime of market economics,
where prices are determined by demand and supply. As crude prices have
crossed $90-mark and set to touch $100 per barrel, people in Rajasthan
have once again started asking why can't the government reduce high VAT rates to cushion the spike. The government of
Rajasthan levies a VAT rate of 28% on petrol and 18% on diesel.
Every time petrol prices go up, the governments' (Both Central and
state) tax kitties get a boost. While it's win-win situation for the
companies and the governments, the consumer remains a perennial loser.
Today, if the retail cost of petrol is Rs 52 per litre, 50% of that
price is due to various taxes. While the Centre imposes taxes like
customs duties, excise, and cess constituting 25%, taxes at the state
level in the form of VAT, dealer commission, and transportation cost,
account for another 22-24%. Source: Times of India.
Value added tax (VAT) on petrol is the highest in Punjab
Chandigarh, January 16, The 10 per cent hike in petrol prices in the past one month will see a
vast shift in sale volumes of the fuel from Punjab, to the neighbouring
states of Haryana, Himachal Pradesh and Union Territory of
Chandigarh. Since value added tax (VAT) on petrol is the highest in Punjab, dealers
in the state, especially those having their operations near the
state's border, are worried that they will loose out on huge volumes in sale to these states.
Because of the high taxes in Punjab, vis-à-vis Haryana, Himachal and
Chandigarh, petroleum dealers in the districts of Ferozepur,
Bathinda, Barnala, Sangrur, Patiala, Ropar, Hoshiarpur, Gurdaspur and Mohali, have
been witnessing a steady shift in business to these states. Petrol in
Punjab has been the most expensive in this region, while it is the
cheapest in Haryana. After yesterday?s hike, petrol in Haryana is cheaper by around Rs 6.40
per litre, and in Chandigarh by Rs 5.95 per litre. Petrol in Himachal is cheaper by about Rs 3.90 per litre.
As a result, residents of these districts prefer to get their fuel from
the neighbouring states, where petrol is cheaper.
"Petroleum dealers are losing out on huge volumes in business, because of high taxes in Punjab.
While Haryana does not impose any cess, octroi or surcharge on petrol,
which ensures that rate of petrol is cheaper there. Chandigarh imposes
10 per cent surcharge on VAT, but in Punjab, consumers have to pay VAT,
cess, surcharge and octroi, leading to a 33 per cent in state taxes. In
this time of high inflation, more and more consumers in the border
districts are now buying petrol from neighbouring states," said JP
Khanna, president, Punjab Petroleum Dealers Association. Source: Tribune news