The Karnataka Hardware and Allied Merchants Association (KHAMA) has urged chief minister B S Yeddyurappa, who will be presenting the state budget on July 17, to cut the tax rate on all hardware and engines from the present 12.4 percent to 4 percent — a move that would enable Karnataka to be on a par with states that collect a uniform value added tax (VAT).
In a charter of demands to the CM, the association has pointed that the difference in the rate of taxes has resulted in a diversion of business from Karnataka to other states. The association, however, has not quantified the extent of diversion.
Pointing to the 4 percent VAT being collected on hardware in Andhra Pradesh, Kerala, Delhi and Haryana, KHAMA's taxation committee member B K Goyal said: "When VAT was introduced we were informed the rate of tax would be similar in all states. But we are yet to understand why dealers in Karnataka have to pay 12.5 percent while other states levy only 4 percent."
Khama has suggested for the reduction of VAT on all kinds of wire products like wire nettings, chain link mesh, perforated sheet netting, barbed wire, agricultural engines and, petrol, diesel and kerosene engines.
KHAMA also requested the CM to add new products to the list of industrial inputs. The list needs to be reviewed and updated periodically, Goyal said, adding the products to be added to the list are industrial valves and pressure gauges used in dairy, pharma and paper industry; ball valves, pneumatic products, tubings and accessories used in machine tool, food processing and automobile industries; gasket sheets in pharma and sugar industries; synthetic resins, liquid adhesives, spray guns rubber-based adhesives; hardware used in furniture industry; generators; engineering plastics; hand-barrel pumps; tool boxes and rice mill and floor mill machinery and spares.
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