Industries seek level playing field
WHILE THE trading community in the State seems a bit apprehensive over implementation of value-added tax (VAT) in the next fiscal, the industrial sector is eagerly awaiting the new tax regime.india Updated: Feb 20, 2006 11:12 IST
WHILE THE trading community in the State seems a bit apprehensive over implementation of value-added tax (VAT) in the next fiscal, the industrial sector is eagerly awaiting the new tax regime.
The CII has emphasised the need for a single common market, and implementation of VAT at the earliest. The industry has emphasised on tax rationalisation, removal of inter-state disparities in tax rates on industrial products, building infrastructure, adequate power supply and labour reforms.
Having new investment potential to the tune of Rs 5000 crore, the textile and garment sector in Madhya Pradesh expects that the budget should focus on value addition and promotion of garment industry as an engine of growth. It wants the process of setting up of textile and apparel parks to be expedited.
The sector has urged the government to take corrective measures to end inter-state disparities in commercial tax, mandi tax and entry tax on cotton, to make MP based industries competitive.
Only MP charges 1 per cent entry tax and 2.2 per cent mandi tax on cotton whereas its neighbours Maharashtra, Gujarat and Rajasthan do not charge entry tax. Maharashtra charges only 1 per cent mandi tax. “Cotton being a dominant raw material for textile industry, the concessional rate of commercial tax on ginned cotton of 3.25 per cent should be revived,” suggests a spinning mill owner.
The sector has also advocated towards exemption of entry tax on imported inputs, inputs procured from domestic market for manufacturing goods for export.
The State already having presence of large auto & auto component companies, with a business turnover of Rs 6000 crore (60 per cent auto component) is facing stiff competition from other states due to tax burden and skewed taxation structure.
“The sector has a potential to grow to Rs 15,000 crore in next five years. Therefore the State Government must take measures to provide a level playing field in order to encourage higher investments in the sector,” says PHDCCI’s resident director Rajendra Kothari.
The Chamber has suggested reduction of rates of sales tax applicable for manufacturing be made 4 per cent against declaration form, exemption of entry tax on all purchases made within MP and levy the same as at present for all purchases from outside the State.
The PHDCCI has suggested the State Government to develop hi-tech townships, with globally competitive Indore and one for automobile & components at Pithampur. “It should be done to facilitate and create an enabling environment for attracting maximum private investment and encourage high technology,” added Kothari.
The biscuit industry in the State is reportedly aggrieved due to 8 per cent trade tax imposition, which it wants to be lowered. Similarly, the labour-intensive footwear industry has also demanded reduction of sales tax to 4 per cent which at present is 8 per cent with 1.2 per cent surcharge.
MP that has a share of 12.8 per cent of national production of cement and large deposits of raw materials is stated to be suffering from royalty on limestone.
The Cement Manufacturers Association has urged the government to revise the norms for charging royalty on limestone at par with other states and the main input limestone be exempted from payment of entry tax, which is currently 10 per cent.
The other areas that the industry sector likes to be addressed in the forthcoming budget are related to inputs costs, entry tax on sale of finished goods and labour reforms. Pointing out at high rates of taxes, the industry has mentioned that petroleum products in MP attract 25 per cent commercial tax and 15 per cent surcharge taking it to 28.75 per cent which needs rationalisation.
Demand is also on reducing Aviation Turbine Fuel (ATF) from 25 per cent to 4 per cent to be at par with Chhattisgarh, Andhra Pradesh and Rajasthan.
The drugs industry has suggested reducing tax from 4 per cent to 2 per cent as the disparity encourages uncalled stock transfers. CII has strongly advocated for labour reforms in the State.
“There is a strong need for a single common market”.
“The auto sector has a potential to grow to Rs 15,000 crore in next five years. Therefore the State Government must take measures to provide a level playing field in order to encourage higher investments in the sector”.