Industry calls for cut in VAT

A pre-budget memorandum submitted to Dasgupta recently by the Indian Chamber of Commerce (ICC), recommended the lowering of the VAT rate for locally manufactured products to four per cent.

Several such products like plastic water storage tanks, MS hinges and tower bolts, and asbestos fibre cement sheets among others, attract a VAT rate of 12.5 per cent, which is significantly higher than the VAT imposed on the same commodities in neighbouring states.

Sources in the industry say this existing phenomenon is leading to a loss in the competitive advantage of the products manufactured in the state.

The manufacturers are losing out to products that are imported into Bengal from other states.

“High VAT rates have a wider connotation. The VAT rate of plastic storage water tanks is 4 per cent in Jharkhand, so it is obvious that a lot of goods will flow in from Jharkhand to Bengal, and that is not good for the local industry. This also affects the employment potential of the state. Also, if good health and safe drinking water is to be ensured for the common masses, the VAT rates on items such as plastic water tanks have to come down,” said Sanjay Budhia, ICC vice-president.

“The minister was sympathetic to the issues and seemed very positive,” he added.

The memorandum also argues for a simplification in the process of VAT collection and remittance in the state.

Exporters in the state have often argued that they have not received the refund on input tax on the purchase of raw materials, consumable stores, plant and machinery within West Bengal, to which they are entitled.