Ficci demands uniform VAT rates
A day ahead of a meeting of the Empowered Committee on VAT, industry chamber Ficci on Sunday voiced concern over the lack of uniformity in the tax rates under the new regime even 10 months after its implementation by states.
By PTI |
NEW DELHI: A day ahead of a meeting of the Empowered Committee on VAT, industry chamber Ficci on Sunday voiced concern over the lack of uniformity in the tax rates under the new regime even 10 months after its implementation by states.
Pointing out that different VAT rates on similar products are defeating the purpose of the new levy by obstructing seamless movements of goods across states, Ficci asked the empowered committee to correct the anomalies.
The chamber conducted a survey, covering Food Processing Industry, FMCG, steel and metal, lubricants and petroleum, fertilisers, chemicals sectors, which reveals widespread non-uniformity in VAT rates.
"To take VAT to its logical end, it is inevitable that there should be uniformity among states in terms of its rates, rules and procedures," Ficci said in a memorandum to the VAT empowered committee.
However, official version of the Empowered Committee is that divergence in tax rates are not too many.
Pointing out that different VAT rates on similar products are defeating the purpose of the new levy by obstructing seamless movements of goods across states, Ficci asked the empowered committee to correct the anomalies.
The chamber conducted a survey, covering Food Processing Industry, FMCG, steel and metal, lubricants and petroleum, fertilisers, chemicals sectors, which reveals widespread non-uniformity in VAT rates.
"To take VAT to its logical end, it is inevitable that there should be uniformity among states in terms of its rates, rules and procedures," Ficci said in a memorandum to the VAT empowered committee.
However, official version of the Empowered Committee is that divergence in tax rates are not too many.
To avoid unwarranted litigation in the food processing industry, a definition of processed food including the developments taking place worldwide in this arena should be prescribed, Ficci said on the basis of feedback of the survey.
Considering the lack of uniformity in VAT rates for feminine and infant FMCG prodcts, the empowered committee should revise the rates and if need be, exempt these products from VAT regime in line with CENVAT exemption, the Chamber said.
Huge inconsistencies exist in the methodology in levying VAT on Ayurvedic medicines, some states charge four per cent, while some other states levy six per cent based on Maximum Retail Price (MRP), Ficci said.
The empowered committee should consider influencing Andhra Pradesh, Bihar and Orissa to levy four per cent on tea on lines of other states, it added.
In case of branded bread and processed and branded salt, the empowered committee should ask states to implement its decision to exempt these items from VAT, the chamber said.
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Pointing out that pure ghee attract the rates of 4 per cent in some states and 12.5 per cent others, the chamber said the the item should be uniformly brought under 4 per cent.The empowered committee should consider rationalising the duty structure on steel and metals and bring them under the category of declared good so that VAT rate of four per cent could be levied on them, it added.
The anomalies in the fertiliser and chemicals sector should be removed which subject urea to four per cent VAT rate, inputs to fertiliser such as naphtha and natural gas to 12.5 per cent, Ficci said.
The empowered committee should also persuade the Delhi government to reduce the VAT rate on petrochemicals and lubricants from 20 per cent to 12.5 per cent, it added.
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