Ludhiana: After the reduction of VAT by Punjab Government on steel from 4.5% to 2.5%, the steel consuming industry also deserves the same package because failing which, this will prove to be a big discrepancy in procedure and taxation.
Steel is the base raw material for the engineering sector & the difference between the slabs will affect the system. The most effective will be the MSME sector.
For example if some big company is manufacturing some product by purchasing the steel then that company will have to pay 2.5% VAT on purchase and then that company if sell it out of state at 2% CST which will be equalent to the VAT paid on raw material. In the process all the Large companies who are self manufacturing will be out of the VAT refund net
Whereas if some company manufacturers any products by purchasing the parts and then assemble it then he will have to pay VAT of 6% on the purchase which will lead to a huge VAT refund as already.
Whereas in case of dealers they will have to pay the VAT by 6% on purchases and then again will have to apply for refunds after its CST sale at 2%.
It is a fact that 90% production of the Bicycle & Bicycle Parts, Fasteners, Sewing Machines, Autoparts are sold out of the state at 2% CST whereas Just 10% are consumed within the state.
This huge difference in VAT on steel & products will force the market to work more in grey economy.
The traders will prefer to show the fake in house production to avoid the VAT refund process which will create harassment for both the traders & department.
If the Punjab Government will reduce the VAT on Bicycle & Parts, Fasteners, Sewing Machines & Auto Parts ,the number two production of these goods will end and the exchequer will earn a huge amount by VAT, at the same time the industry will free from the process of VAT refunds, this process will also help the state in abolishing the bogus transactions.
So Federation of Associations of Small Industry of India has requested the state Government to reduce the VAT on Bicycle & its parts, Fasteners, Sewing Machines & Auto parts.
(The Author is National President, Federation of Associations of Small Industries of India -FASII).//ludhiana news online, ludhiana news in English, ludhiana news, ludhiana current news, ludhiana news live, Ludhiana breaking news, Ludhiana headlines, Ludhiana latest news, punjab news, india news, punjab news live, punjab news online, punjab news, punjab news headlines, punjab breaking news, india news, punjab news,