Uncertainty over removal of Value Added Tax (VAT) on bicycle and cycle parts in the state has caused worry among the manufacturer who claim that dealers have reduced purchasing goods from them in wake of apprehensions of the VAT removal that would reduce the bicycle cost.
Deputy chief minister Sukhbir Singh Badal had on December 12 last year said there would be no VAT on bicycle industry in the state. However, he was told by a section of the industry that removal of entire tax from the industry would lead to losses not only to the government, but also to the cycle industry.
Badal had later asked the industry to discuss the issue among themselves and inform him when any consensus is reached. Several round of meetings between the cycle industry and excise and taxation officials also took place to discuss the issue. Five member committee was formed on VAT regime also held meetings with the excise officials as well as the industry.
A consensus in the industry was reached on January 9 this year, when all manufacturers agreed on zero VAT with some conditions. The committee members who were in contact with Sukhbir over the issue, told the same to him. However even after a long time, no announcement for VAT removal has now caused worry among the industry leaders.
Gurmeet Kular, president of Federation of Industrial and Commercial Organisation (FICO) said due to the uncertainty in the industry, now dealers had reduced purchasing goods from the manufacturers. "The issue of VAT has instead caused losses to the industry rather than doing any good" said Kular.
FICO was among many other trade organisations that were against complete removal of VAT from bicycle industry. They had later agreed after several rounds of meetings. These organisations were asking the state government to reduce the VAT and not remove it completely.
A meeting on Tuesday between the five members of VAT committee with Sukhbir at Jalandhar also did not bring any announcement for the cycle industry for which the manufacturers were waiting eagerly.
Sources in the excise department said while the assessment of losses that would be caused to the department after the removal of VAT on bicycle industry have been told to the members of committee on VAT, the members were adamant that these losses were exaggerated by the department.
Satish Dhanda, a member of the committee and chief of industrial wing of the Shiromani Akali Dal (SAD) had recently said the committee as well as the excise department were not agreeing with one another's views and there was a confrontation between them.
However, the patience of the industry leaders is coming to a saturation point with voices of anger starting coming out. A cycle manufacturer having a unit at Focal Point, on condition of anonymity, said if the state government was not serious in removing or reducing VAT on bicycle industry, it should be clearly told to the manufacturer so that losses are not suffered by the industry."