Non-removal of input tax credit, no reduction of VAT on petro products disappoint Gujarat Inc.
Industry in Gujarat was faced with disappointment over the budget proposed by state finance minister (FM) Nitin Patel on Wednesday. Once again, the long-standing demands of the industry remained unfulfilled and ignored. Neither was input tax credit done away with, nor was a cut in VAT on petroleum products announced.
The industrial sector of the state has been left feeling disregarded. A mere 4.20% or Rs2,500 crore of the total Rs58,500 crore budget will be spent on industry and mines.
“This may render the state just a trading hub as manufacturing will prove to be more expensive,” said chairperson of Assocham, Gujarat council, Bhagyesh Soneji.
Instead of providing relief, the state government has added a burden of Rs44 crore on the people of Gujarat, she said further. “The state FM has announced provision of relief to the tune of Rs245 crore. However, he has also announced additional tax burden of Rs289 crore. In short, people of Gujarat will have to pay Rs44 crore more tax in 2013-14,” Soneji said.
Piyush Shah, president of CII Gujarat council, said that the budget has been disappointing for industry. “On the other hand, the government has focused on social services, which is required for social sector growth in the state. The tax burden is balanced, making it a balanced budget,” Shah said.
The Gujarat Chamber of Commerce & Industry (GCCI) is partially satisfied with the budget. “Our suggestions on professional tax exemption and increase in turnover for lump sum VAT payment have been partially accepted. However, there is no mention of removal of 2% subsidy in VAT on interstate trade,” said president of GCCI, Prakash Bhagwati.
The state budget is not industry friendly at all, said former president of CII Gujarat council, Yatindra Sharma.
“Industry contributes the most to the state’s GDP, yet the state government has ignored the sector. We have been requesting the government to remove input tax credit. It is the pocket of the state’s citizens that will bear the brunt of the fight between the central and Gujarat governments,” said Sharma.
Piruz Khambatta, MD of Rasna International said he was confident of the state government being adamant on the input tax credit issue.
“Two basic laws of tax are not followed in this state. First is that lower tax leads to higher income and second is no cascading effect of taxes. Both these rules are broken here.
Taxes are high and the consumer is paying multiple taxes on a single product. In the end, this is resulting in a price rise. As regards central sales tax (CST), Gujarat government should ask for it from the Centre, instead of putting its burden on the exchequer. I am not expecting removal of input tax credit before the next state elections,” Khambatta said.
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