FASII: Exempt VAT on bicycle parts or place bicycles on 0% category

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Ludhiana, March 18, 2013: In a communication to Punjab finance Minister Parminder Singh Dhindsa, the Federation of Associations of Small Industries India

(FASII) National President Badish Jindal has request for exemption of VAT on bicycle-parts or placing bicycles on 0% category.

He apprised Dhindsa stating that they have learnt that some associations have demanded exemption of VAT on bicycles costing upto Rs. 3,500. He said according to VAT Act, the exempted items cannot be considered for VAT refunds.  However, 95% of bicycles are exported to other states from Punjab. In the process, huge amount of VAT refunds are claimed from the department by the manufacturers of this product.  It is a fact that most of the bicycle manufacturers are assemblers who make bicycles by purchasing parts from different bicycle parts manufacturers by paying VAT on parts.  As such, there
should be a way out to claim VAT refunds.  It is, therefore, suggested that instead of exempting bicycles from VAT, the bicycle-parts should be placed under 0% category.
Further, he said by all logic, reason and rationality, bicycle and bicycle-parts are one and the same.  Therefore, we plead that bicycle-parts should also be given VAT exemption as given to bicycle as a whole.  It is fully known that more than 10,000 bicycle-parts manufacturers in Punjab are providing direct and indirect employment to more than three lakh persons.
Jindal also said the government needs to consider of placing the bicycle-parts at first on the exempted category of VAT.  Only then the bicycles need to be placed on the exempted category of VAT.  Because, the bicycle manufacturers have to pay VAT on raw materials.

He hoped that his suggestions will be taken into consideration.

Date: 
Monday, March 18, 2013