With the aim of boosting the production of iron and steel in the state, the Punjab government on Monday gave the green signal for the reduction of value-added tax (VAT) from 4.95% to 2.5% by restructuring the VAT regime.
The decision was taken by deputy chief minister Sukhbir Singh Badal during a meeting with a delegation of furnace, iron and steel rolling mills, and pipe manufacturers. The restructured VAT regime would be notified and implemented from February 1, 2014.
Sukhbir approved the new proposed VAT regime for the iron and steel industry, aiming to enable the industry to compete with neighbouring states and increase revenue, besides striking a balance between incentives and risk.
It was proposed that the rate of VAT on scrap (melting and rolling), ingots/billets/blooms or other semi-finished goods, finished goods, inter-state sales would be reduced to 2.5% from 4.95% with surcharge of 10%.
On the industry's demand, the deputy CM also cleared the implementation of advance tax on all items of iron and steel, including furnishing goods.
Sukhbir said this decision would eliminate tax evasion, besides increasing production by encouraging the flow of scrap and raw material into the state.
Figures that count
Rs 1,091 crore: Total tax collection from iron, steel industry (2012-13)
Rs 403 crore: Refund to taxpayers
Rs 688 crore: Net tax collection