The Gujarat Chamber of Commerce and Industry (GCCI), which had felicitated Chief Minister Narendra Modi last November for announcing the abolition of octroi, is now left complaining about no changes in the VAT structure and absence of any relief in electricity duty, a major input for industrial production.

According to Paru Jaikrishna, president of the GCCI, the Budget is silent over any relief in stamp duty or reduction in electricity duty, “which means the Budget does not offer any tax relief.”

Moreover, there is no sign of the much expected changes and rationalisation of the VAT structure. “There are many commodities where VAT is levied at four per cent in other states, but in Gujarat, the rate is 12.5 per cent. Now, with the introduction of additional tax, these commodities will become costlier... Industrial raw materials and machinery, which have a bearing on the progress of the state, will attract VAT at five per cent, which will prompt people here to procure them from other states,” she said.

Moreover, if the Centre reduced CST on them to two per cent this year, then this will lead to a very precarious situation, she said. All this will make the chances of achieving a 14 per cent growth rate in industrial production unlikely, the chamber chief said.

She said the hike in VAT was enormous in view of the income estimates of Rs 12,177 crore for 2007-08. In 2006-07, income from VAT was Rs 9,511 crore and for 2008-09, it is projected at Rs 13,964 crore, which translates into a 46 per cent jump in revenue from VAT.

This additional hike is avoidable, she said. Looking at the gradual hike in tax revenue year after year, there is scope for reconsidering the hike in VAT rates, she added. On the plus side, the concept of human development index in the budget and announcement of the Vibrant Gujarat 2009 summit are welcome announcements, she said.